Research
Fed research: Three channels of shadow banking fragility
Working paper models the increased fragility created by shadow banks, even though they provide higher levels of credit to the economy
ECB research assesses fiscal impact of bailouts
ECB paper analyses the impact on a government’s fiscal position of assistance measures; finds majority of the financial needs (4.9% of 5.1% of GDP) were recorded is first three crisis years
Chilean paper analyses unemployment’s impact on wages
The impact of unemployment spells on wages is high, but the volatility ‘increases much more during recessions’, research finds
Bank of Finland paper tests price-level based forward guidance
Seppo Honkapohja and Kaushik Mitra use ‘adaptive learning’ approach to show price-level targeting can outperform inflation targeting under some circumstances
Chilean paper calls on policy-makers to consider source of shocks
Policy-makers in Chile ‘have to take into account the source of the shock when evaluating possible policy options’ in response to copper price shocks, research finds
Colombian paper analyses intraday liquidity needs
Intraday liquidity risks can be ‘mitigated or even eliminated’ if entities have higher opening balances than the balances required to opportunely liquidate all payment obligations, paper finds
Solomon Islands research illuminates inflation sources in small islands
Working paper finds domestic factors are mainly behind inflation outcomes, with the exchange rate only having a temporary impact; economy takes around a year to bounce back from shocks
Expectations have variable impact, finds ECB paper
Working paper suggests there have been ‘significant changes’ in the degree to which expectations have driven unemployment, with a particularly large effect during 2008 financial crisis
Fed paper measures damage from capital flow surges
Researchers find surging capital flows push labour away from manufacturing, create sudden booms and recessions, and do more damage if there is a sudden reversal
Romer and Romer find financial crisis impact ‘not large’
NBER working paper constructs new series on financial distress in advanced economies to better capture degrees of financial crisis; finds output declines are ‘moderate and largely temporary’
Riksbank’s new approach to nowcasting reviewed
Article in Economic Review evaluates the forecasting performance of a dynamic factor model adopted by Sweden's central bank, finding it a useful addition to its suite of tools
Risks in commercial property have fallen, RBNZ research finds
Article in latest RBNZ bulletin finds less leverage is being used to fund new purchases and developments, while market is showing signs of a ‘robust’ recovery
BIS paper finds macro-prudential impact varies during cycle
Working paper finds evidence tightening policy is more effective than loosening it, and has a greater impact when credit has been expanding quickly
BIS paper weighs effectiveness of FX intervention strategies
Intervention to reduce volatility or to lean against exchange rate movements each come with distinct costs and benefits, working paper finds
Colombian paper considers reaction functions in payments
Working paper examines how different entities within a large-value payment system react to failures within that system, finding that a range of factors are in play
CNB paper questions strength of ‘border effect’
Studies using outdated methodologies overestimate the impact of national borders on trade, authors say; effect is stronger in emerging markets
Visual interfaces ‘hold promise’ for policy-makers
Working paper published by ECB finds ‘analytical visualisations and interactive interfaces’ can help with the communication of risks; presents macro-prudential data cube
Forward guidance can help QE succeed, Finnish research says
Article in Bank of Finland bulletin considers whether eurozone is at risk of Japanese-style deflation, finding the ECB’s asset purchases reduce the odds of this outcome
RBA research suggests options for IMF to overcome governance issues
Analysis of constraints on IMF actions suggests seeking backup from other international organisations could add to political clout, but quota reform remains a problem
ECB paper emphasises importance of time horizons for early-warning models
Working paper finds the selection of a particular time horizon can have ‘considerable implications’ for the performance of economic variables in predicting bank crises
RBA research finds CCP rules are effective in containing severe shocks
Paper tests central counterparties under extreme ‘tail of tail’ scenarios and finds new rules designed to promote their stability are effective
IMF paper warns against ‘overburdening’ LatAm central banks
Working paper studies evolution of central banks in Latin America, and warns against jeopardising the credibility they currently enjoy by handing them new mandates
Finnish paper charts evolution of PBoC policy since 1999
Discussion paper asks whether China has shifted toward a ‘price-based policy’ and finds the PBoC has become more responsive to changes in economic conditions in recent years
Paper examines role of capital in BHC lending decisions
Authors find an increase in capital requirements of bank holding companies is ‘likely’ to increase the interest rate charged on loans, resulting in a ‘significant’ reduction in lending