Research
Supply chain integration drives closer price co-movement, BIS paper finds
Headline inflation rates and producer prices move more closely together between Asian economies that trade more with one another, BIS paper shows
Bar should be lowered for early warnings on currency crises, says IMF economist
Currency crisis early-warning systems should err on the side of flagging up more crises rather than less, even if this leads to an increase in false alarms
Massive stimulus saved China from ‘great recession'
The rest of the world could have avoided recession too, had other governments dared implement such a ‘bold and powerful' stimulus package, St. Louis Fed paper suggests
Dutch say US stress tests produced ‘valuable information’
Researchers find the disclosure of stress test results in the wake of the financial crisis had a ‘strong’ effect on credit default swap spreads, but less of an impact on stock returns
Empirical study informed Friedman's shift to monetarism
Divergence in views of Milton Friedman and Henry Simons was due to different emphasis on data construction and analysis, argues George Tavlas
Czechs discuss appropriate capital requirements for Sifis
Paper sets out the range of indicators that could be used, and the advantages and disadvantages of focusing on an individual or consolidated level
Foreign banks acted as 'buffer' on Korean monetary policy during the crisis
Bank of Korea working paper examines the impact of foreign banks on the central bank’s monetary policy transmission mechanism during the recent crisis
Central bank communication key to herding behaviour, BoJ paper finds
‘Two layer’ model of investor information highlights crucial role for central bank communications in causing – and containing – herding behaviour in markets
Offshore renminbi has increasing impact on Asian exchange rates
How long the independent impact will last will likely depend on China's progress in liberalising its capital account, according to working paper from the Bank for International Settlements
Effect of a monetary policy shock is volatile over time
Research using 100 years of US economic data finds the sensitivity of the economy to monetary policy shocks has changed ‘dramatically'
French paper constructs credit risk indicators for eurozone
Working paper published by Banque de France builds credit risk indicators that are ‘highly robust’ leading indicators for economic activity and the growth of bank lending
Early-warning indicators ‘crucial' where imbalances don't cause inflation
Hungarian paper singles out early-warning signals for macro imbalances that could be missed by a single-minded focus on price stability
Monetary policy's 'new normal' will challenge central bank independence, say IMF staff
The ‘new normal' for monetary policy, including taking account of macro-prudential concerns and cross-border spillovers, will also complicate accountability and challenge central bank independence
ECB paper tackles liquidity ‘free-rider’ problem
Working paper highlights ‘excessive liquidation’ caused by financial intermediaries free-riding on other firms’ liquidity holdings, but says macro-prudential policy can create ‘constrained efficiency’
IMF says real interest rates have fallen sharply since 1980s
Rise in emerging market savings rates, increase in demand for safe assets and recent fall in yields in advanced countries are the major contributors to real rate decline since the 1990s
Countries in monetary union should index sovereign debt to GDP growth
Bank of England working paper finds GDP-indexed bonds should be used more widely, especially by countries with volatile GDP growth or in monetary unions
Fannie and Freddie served as 'disciplining device' in sub-prime market
US mortgages eligible to be bought by Fannie Mae and Freddie Mac before the financial crisis had 'similar ex ante risk characteristics' to other mortgages, but performed better during crisis
Bank of England paper estimates effects of monetary policy
A new approach outlined in a Bank of England working paper avoids three major pitfalls in estimating monetary policy's effect on growth and inflation
Richmond Fed study shows 'dramatic crossover' in payment methods of US citizens
Study evaluates Fed data tracking 2,500 participants making close to 13,000 payments during three days in October 2012, shows many seniors sticking to mail as main payment method
Too big to fail subsidy was worth up to $300bn in eurozone in 2012, IMF says
A report in this year's Global Financial Stability Review says that while excluding the possibility of government support may not be possible, ways should be found of making banks pay for it
ECB paper finds US resolution authority has not solved too-big-to-fail problem
Research uses creation of US Orderly Liquidation Authority as ‘quasi-natural experiment’, finding many banks are disciplined but the largest still do not believe the threat to be credible
BoJ review dissects inflation expectations
Economists from monetary analysis department say BoJ communication has generated a 'spike' in expectations around 2%, but dispersion is still ‘substantial’
Czech paper examines strength of link between financial and real sectors
An expansion of credit from banks ‘supports industrial production' in small open economies such as the Czech Republic, working paper finds
New York Fed study finds TBTF banks take on more risk
Study uses a rating agency measure of government support and finds it correlated with the size of banks' impaired loan ratios