Economics
Stock imbalances can stabilise or destabilise – BIS paper
Asymmetry implies burden of adjustment tends to fall on deficit countries
BIS’s da Silva defends DSGE modelling efforts
The models have not performed as badly as critics claim and new research efforts are creating fresh possibilities, says BIS’s deputy general manager
RBI paper finds complexity in exchange rate pass-through
Authors argue the standard view of exchange rates having a “linear and symmetric” impact on prices is flawed
Financial frictions key to DSGE performance – NY Fed paper
Post-crisis period was a harsh testing ground for structural models, but the New York Fed’s DSGE model was at least equal to private forecasts, researchers say
BoE not to blame for gold standard-era crises in US – paper
Bank of England’s rate decisions between 1884 and 1913 were not responsible for “causing or aggravating” crises in the US, author finds
Neural network learns ‘universal model’ for stock-price moves
Relationships between order flow and price “are stable through time, and across stocks and sectors”
Intellectual property investment fuelling growth in Australia – Lowe
RBA governor says lack of growth in “tangible assets” is turning investment towards the information technology market
Yield curve inversion still tends to signal trouble ahead – Fed economists
The term spread has a “strikingly accurate record” for forecasting recessions, and this time looks to be no different, say researchers
Dudley goes against Trump’s protectionist line
New York Fed president criticises protectionism as Donald Trump steps up rhetoric; questions value of excessive reserves accumulation
NY Fed paper studies when government should issue safe assets
Model implies only under certain situations should the government issue new debt; changing inflation target might be superior
Measuring Venezuela’s hyperinflation
Steve Hanke discusses how economists can make use of high-frequency exchange rate data to track rapid price movements in Venezuela
Solving the owner-occupied housing puzzle
A group of researchers has outlined what they see as a better method of integrating owner-occupied housing into the CPI, as the EU’s statistical agency wrestles with the problem
‘Job polarisation’ drives US men out of labour markets – Kansas City Fed paper
Technological change and globalisation reduce demand for skills of young and unskilled men
Researchers develop new index to measure geopolitical risk
Heightened threats slow growth and equities returns in advanced economies, paper finds
World does not have to be ‘hostage’ to technology – Wilkins
Finding a way to control the market power of tech giants will be important, the Bank of Canada deputy says
Deflation tends to de-anchor expectations – BIS paper
Deflationary episodes seem to render expectations lower and more backward-looking
Cœuré: ‘three lines of defence’ needed to protect ECB
The ECB executive board member says without reforms the ECB may end up having to “test the limits of its mandate”
Misinterpreting commodity price swings can be damaging – BIS paper
Whether movements are down to supply shocks or changes in global demand matters for policy, and mistakes can be procyclical when central banks act together
Central bank communications risk circularity, says BIS paper
Policy communications influence market prices and market prices influence policy, warn Stephen Morris and Hyun Song Shin
Income convergence in reverse among original euro members, research says
Fall in income disparities halted soon after 2002 and started to increase after financial crisis
Rebased ‘Maddison’ data reshapes economic history
New approach to measuring GDP per capita generates fresh insights from the long-run growth database
Bank Indonesia launches joint initiative as rice prices bite
Indonesian central bank and government announce joint measures to control inflation arising from food price volatility
Central Banking Awards: Bank of Canada is central bank of the year
Awards go to the Bank of Canada, PriceStats, Perago and De La Rue
Liberalising services trade could tackle imbalances – BoE paper
Finding ways of reducing barriers to services trade could substantially cut imbalances