Research
Hungarian economists wary of foreign bank branches
Researchers are concerned that a shift away from foreign bank subsidiaries to branches increases the risks of inadequate supervision and threatens financial stability both at home and abroad
BIS research dismisses fears over high-quality asset shortage
Article says increase in high-quality assets appears sufficient to meet rising demand, but risks could still come from elsewhere
BIS research finds capital requirements had minor impact on bank lending
Quarterly review article presents evidence that banks have adjusted to higher capital requirements mainly via retained earnings, rather than by cutting lending, with less of a macroeconomic impact
BoE economist creates ‘nowcast' composite from global indicators
Combined indicator weights global indexes such as PMI and CPB world trade to ‘nowcast' world economic activity more accurately than before
Eurozone inflation and output do move in step, says IMF working paper
Researchers argue co-movement of inflation and output is observable in the eurozone at ‘business cycle frequencies', confirming New Keynesian models to demand shocks
Near-zero interest rates of limited help to non-financial firms
BIS quarterly review article finds that lesser pass-through is partly related to higher premium for risk required by financial intermediaries
Reserve Bank of Fiji adviser targets 5% growth
Lorraine Seeto believes the Fijian economy can grow by 5% each year; highlights the need for more investment, more exports, and a low and stable inflation rate
Dallas Fed highlights transformation of FOMC statements over past 20 years
Before 1994, markets were left in the dark over interest rate changes; statements have expanded seven-fold in the past 20 years, reflecting the evolution of monetary policy operations
BoJ paper: ‘Sudden stop' central factor in recent financial crises
Guillermo Calvo argues 'sudden stops' help explain a number of issues which conventional monetary policy fails adequately to address
Bank of Finland publishes research overview
Newsletter highlights research on bank-sovereign feedback loops, information costs and their effect on investment and financial liberalisation in China
Temptation preferences can inform asset pricing, Fed researchers find
According to San Francisco Fed paper, self-control preferences have important implications for macroeconomic issues, such as social security reform, income tax reform and asset-pricing issues
Bundesbank economists propose composite FSI with real economy predictive power
Composite financial stress indicator is better at predicting developments in the real eurozone economy than volatility indexes that are currently commonly used
IMF paper says ageing populations are dampening impact of monetary policy
Working paper says monetary policy is becoming less effective in advanced economies undergoing demographic shift; calls for policy-makers to adapt
Obstfeld: Weak ex ante financial constraints prompt 'bad equilibria' in markets
Absent adequate fiscal space, financial instability will lead to price instability or sovereign default, which will further impair the functioning of financial markets
FOMC policy rate guidance pushes up US equity prices
Netherlands Bank research paper finds policy rate guidance also leads to significant reduction in implied volatility for US government bonds
Surpluses of Germany and China feed global imbalances, BIS research finds
Bank for International Settlements paper compares current account and creditor positions of Germany and China, finding Germany’s surpluses to be more resilient in the face of the global financial crisis
Fed minutes ‘significantly affect’ US asset prices
New York Fed economic policy review finds that US asset price volatility increases when the Fed releases minutes from policy meetings, but less so since FOMC has become more transparent
Customers of failing banks less likely to trust other people
DNB working paper says mistrust prompted by experience of crisis increases likelihood of bank runs and undermines long-term growth
Implicit government guarantees leads to increased risk-taking at banks
Fed discussion paper argues that strengthening market discipline by reducing bank complexity is needed to address moral hazard
BIS economists find Fed's QE helps curb tail risk perception
Paper published today finds the effect of the Fed's announcing unconventional monetary policy measures is strongest when used in conjunction with forward guidance on low interest rates
NY Fed staff say effect of policy changes depend on risk environment
New staff report argues that macro policy announcements affect asset prices to different extents depending on the existing economic outlook; when risk is elevated, the impact is reduced
Financial crisis caused significant shift in the euro area Beveridge curve
ECB paper finds that labour market consequences of the crisis have been heterogeneous across countries, with Spain and Germany diverging the most
IMF paper considers impact of China’s capital account liberalisation
Researchers suggest that reduced capital control will likely lead to net outflows from equity and bond markets as domestic investors look to diversify
New York Fed paper wary of higher inflation targets
Staff report finds that pursuing a higher trend rate of inflation would likely create a ‘more volatile and unstable’ economy and unseat inflation expectations