Debate on Immigration Policy: Statements by Fed Governor Stephen Miran Under Scrutiny

In the recent debate over the impact of immigration policy on inflation, Stephen Miran, a newcomer among the members of the Federal Reserve Board of Governors, finds himself in the crossfire of criticism. Miran, who portrayed the reduction in housing demand as a result of President Donald Trump’s immigration policy as having a dampening effect on inflation, faces allegations of overstating the significance of his theses. The empirical basis for Miran's hypotheses is primarily supported by the work of MIT economist Albert Saiz. In his studies, Saiz demonstrated that an immigration increase of one percent of the city population raises rents by approximately one percent. However, Saiz criticizes that Miran used a significantly smaller baseline in his calculations than was the case in Saiz's original model, leading to a distorted effect on inflation. Miran, who bases his thesis on the historical experience of the 1980 Mariel boatlift, argues that zero growth in immigration could lead to a one percentage point lower rental inflation per year. Overall, however, Miran's optimism about the impact of immigration policy on inflation remained without broad support within the Federal Reserve. According to Saiz, the actual impact of immigration policy does not move within the scope outlined by Miran. Nevertheless, in a long-term assessment, Miran predicts a decline in consumer price index-driven rental inflation by two percentage points by 2027, and thus a 0.4 percent reduction in the overall inflation rate as measured by personal consumption expenditures by 2028.