Research
Regulatory reliance to blame for faulty credit ratings, paper claims
The growing importance of credit ratings to financial regulators and prudential regulation explains more of the distortion in ratings than the question of who pays for the rating
Aid ‘surges' benefit countries where currency or inflation is allowed to rise
If large inflows of aid are ‘sterilised' in an attempt to curb inflation or maintain a set exchange rate, the economy will not feel the benefit of aid, a new IMF paper finds
Fed 'policy shocks' cause both dollar and foreign interest rates to fall, Boston Fed paper finds
Expansionary monetary policy shocks by the Federal Reserve leads to dollar depreciation, while similar 'unexpected expansionary announcements' by foreign central banks cause it to appreciate
Global lending conditions more connected than ever, says BIS's Turner
Big emerging market corporations are borrowing abroad, while global capital has been flowing into EMs – meaning lending conditions are more strongly connected than before
Interest swaps with longer maturities more sensitive to macroeconomic news, DNB paper suggests
The impact in Sweden of macroeconomic news on the sensitivity of interest rate swaps was reduced at the effective zero lower bound at short maturities but not at longer maturities, according to paper
Global crisis weakened monetary policy transmission, Czech paper shows
New research from the Czech National Bank studies the transmission of monetary policy through different channels, finding it works as expected but was weakened in the financial crisis
Unco-ordinated macro-prudential policies could result in ‘capital war’, says BoJ paper
Johns Hopkins professor argues that, absent any co-operation, countries across the globe will implement macro-prudential policies in a manner ‘reminiscent of an inefficient arms race’
Central banks must lean against boom and bust to retain credibility, says Borio
A more symmetrical response to booms and busts is required to leave policy-makers with the ammunition and credibility to tackle them, says top BIS economist
ECB working paper unpicks household demand for mortgage types
Paper comes to predicted conclusion that greater income volatility reduces demand for variable-rate mortgages; authors also reckon borrowers on variable rates benefited from lower rates
Security of hard pegs ‘illusory', IMF economists find
Re-examination of exchange-rate regime orthodoxy finds hard pegs are too risky, but 'managed floats' can have 'significantly lower risks'
IMF paper finds remittances depend on source and recipient country business cycles
Level of remittances are negatively correlated with strength of recipient economy and positively with source economy; when both are weak, remittances continue, study shows
IMF research maps US shadow banks
Research uses IMF-developed global flow of funds (GFF) conceptual framework to analyse the shadow banking system in the US
Restrictions on capital outflows more effective when supported by strong fundamentals and institutions
IMF working paper finds tightening of restrictions fails to reduce net outflows when macroeconomic fundamentals, good institutions, or comprehensive existing restrictions are lacking
Banks with more interbank relationships meet liquidity needs ‘more efficiently’, finds Bundesbank paper
Discussion paper examines the link between interbank relationships and liquidity needs, using data from German banks’ use of ECB main refinancing operations
Colombian paper examines women in the workplace
Researchers say the large increase in the number of urban women participating in the workforce is predominantly a result of married women with low education levels getting jobs
Prices transmit information from the informed to the uniformed, say researchers
Bank of Italy working paper examines how the price system affects companies’ demand for information on the macroeconomy; contributes to business cycle theory
Portuguese paper finds banks lend to riskier borrowers when policy rates are low
Researchers find evidence supporting the existence of the ‘risk-taking channel’ of monetary policy; banks will grant more loans to companies with recent defaults when rates are lower
RBA inflation target mitigated terms of trade macro shocks
Researchers at the Reserve Bank of Australia argue that the country’s inflation targeting framework helped to mitigate the macroeconomic consequences of the recent terms of trade boom
Household borrowing not caused by income inequality, Richmond Fed paper argues
Finds low-income households in high-inequality regions accumulated less debt relative to income than their counterparts in lower-inequality regions; rebuts 'wish to keep up' as driver of credit demand
Chinese labour costs set to play significant inflation role
Researchers suggest that increases in labour costs do not pass ‘fully’ through to prices in China; warn this could change on the back of ‘recent sizeable growth’ in nominal wages
Kohn says Fed's independence 'at risk'
Former Federal Reserve vice-chairman Donald Kohn argues the institution's autonomy has been undermined by recent policies; lists four explicit threats in paper published by the Brookings Institution
Paul Tucker laments 'faltering vigour' of international reform
Former BoE deputy governor argues there is 'less coherence, faltering vigour and conflicting views about how different national regimes should apply to inherently international markets'
Bank of Finland paper backs nominal GDP as policy target
Research finds that price level or nominal GDP targeting is ‘on the whole’ better than inflation targeting as long as private agents adapt their expectations accordingly
Dutch paper finds Germans ‘substantially more cash oriented’ than other nationalities
Researchers consider why cash is still ‘heavily used’ for low-value payments in Europe; attributes German consumers' continued use of cash to ‘precautionary’ reasons