BIS paper says trade finance impacts global spillovers
Working paper emphasises importance of trade finance when modelling global shocks
Trade finance is an important feature of the global transmission of shocks, but is often missing when economists build models, according to research published by the Bank for International Settlements (BIS) on January 22.
The working paper, International Trade Finance and the Cost Channel of Monetary Policy in Open Economies, by Nikhil Patel, examines how the inclusion of trade finance in dynamic stochastic general equilibrium models affects their results. Patel finds models incorporating trade
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