Economics
Macro-prudential and fiscal co-ordination could pay big dividends, IMF staffers say
International co-ordination of macro-prudential and fiscal policies would have a far greater effect than the literature predicts for internationally co-ordinated monetary policy, paper shows
EU members are ‘growing apart' not growing together, paper finds
Researchers examine EU member states' ‘dynamic convergence' and find seven separate groups of countries that are not converging with one another
ECB working paper says sovereign spreads driven by fundamentals
Paper finds that before the crisis, eurozone sovereign spreads were somewhat decoupled from fundamentals, but since then, country-specific factors have played a bigger role than regional contagion
Credit ratings hit prices 'significantly' more in times of crisis, paper finds
Effects of rating actions on market prices not crucial during favourable market conditions but 'very significant' in times of crisis; analysis covers ratings and prices of 16,500 bonds over 12 years
RBA economists examine effects of price shock on ‘endogenous reserves'
When a small open economy depends on non-renewable resources to a large degree, the effects of a shock to the prices of those resources are amplified, paper finds
New Zealand bond yields are determined globally, paper finds
Global factors are the dominant determinant of New Zealand 10-year bond yields, but shorter term borrowing depends much more on local factors, according to a new working paper
Link between ECB liquidity ops and interbank repo breaks down in crisis
Researchers at the New York Fed find that the relationship between ECB monetary policy operations and interbank borrowing did not survive the collapse of Lehman Brothers and associated crisis
Greek paper finds Turkish economy bucks EU trends
Academics use a GVAR model to examine interlinkages between southeast European economies and how they react to eurozone macroeconomic policy; Turkey bucks trends followed by EU members
ECB paper proposes new metrics for competitiveness
Researchers say that conventional indicators of competitiveness are losing their relevance as production spreads across borders, and propose two new measures based on concept of global value chains
Bank of Canada deputy discusses price divergence with US
John Murray says prices in Canada have been lower than those in the US for much of the past 30 years; notes the exchange rate 'seems to be driving prices in the two countries away from each other'
Using assets as collateral increases volatility of returns, Buba paper finds
Bundesbank discussion paper uses model comprising agents differing in their level of risk aversion; negative economic shocks substantially alter wealth distribution between the two
Bundesbank research seeks to disentangle recession and depression
Discussion paper isolates unique features of depressions and booms to separate them out from recessions and expansions; results suggest recent ‘Great Recession’ was not a depression
Mersch tells Greece not to forget future generations
Executive board member praises country for its ‘extraordinary efforts to refute the naysayers’, but warns hesitation now will force future generations to bear the burden of past mistakes
RBA's Debelle backs Mundell-Fleming model
Reserve Bank of Australia assistant governor tells IMF annual conference that recent papers have failed to convince him to abandon traditional models of exchange rate effects
ECB paper questions quantity theory of money in low-inflation countries
Researchers say evidence for the theory is 'just not there' in countries with low or moderate inflation, but becomes a ‘better fit' when correcting for variation in output growth
Krugman says ‘Greek-style’ crisis in US or UK would have ‘expansionary effect’
Economist extends Paul de Grauwe's point that countries borrowing in own currency are immune to self-fulfilling liquidity crises; says loss of investor confidence would raise output in large economies
Focus on non-linearity can improve macro estimates, research finds
Czech National Bank working paper argues considering non-linearity can advance probabilistic economic assessments; focuses on relationship between credit markets and the rest of the economy
Fed paper trials new model for estimating trend inflation
Researchers at the Federal Reserve generate lower estimates of trend inflation in advanced economies by using a multivariate model; still struggle to outperform random walk forecasts
Poland's business cycle largely a function of EU developments
According to IMF paper, eurozone developments explain 50% of Poland's output and interest rate business cycle variance, but only 25% of changes in headline inflation
Bank of Canada deputy takes on 'elusive' potential output
Agathe Côté says measuring potential output is a 'formidable' task; notes Canadian output gap is 'sizeable' and potential growth rate likely to remain at 2% in coming years
SNB paper tests shock response on individual sectors
Researchers apply dynamic factor model to Swiss economy to examine impact of monetary policy, exchange rates and external demand on different sectors
Flug calls for inclusive Israeli labour market
Next Bank of Israel governor Karnit Flug says integrating Arab population into Israeli economy will counteract expected decline in working age population and subsequent drop in growth rates
IMF director delivers verdict on Abenomics one year on
Anoop Singh says Japanese prime minister’s stimulus plan has helped put Japan ‘at the centre of the global economic map’; tells Japan not to squander the opportunity
ECB’s Asmussen backs ‘allocative’ fiscal union
Board member ‘sees a role’ for a European fiscal union in ensuring resources are allocated efficiently; suggests other forms of centralised budgeting are less useful