Research
‘Ambitious’ capital markets union necessary – Constâncio
Better eurozone capital markets would smooth regional shocks, ECB vice-president says
Fed paper searches for optimal bank capital
Study weighs higher cost of equity against the reduction in costly financial crises implied by higher capital, estimating an optimal figure
Buyers of risk in CDS market highly exposed, ECB paper finds
Researchers analyse credit default swap market using data from 2011 to 2014
Uncertainty matters for forward guidance success – BoE paper
Authors show that introducing uncertainty generates significantly different macroeconomic effects, with implications for policymaking
Asset purchases could bring benefits in ‘normal’ times – paper
IMF working paper discusses whether asset purchases should be added to standard central bank toolkit; the policies seem more effective at combatting financial shocks than supply shocks
Bank of Finland publishes China and Russia forecasts
Chinese targets “encourage data manipulation”; Russia stalls on structural reforms
BoJ builds on BIS banking statistics
Researchers break down the statistics further, shedding new light on patterns of cross-border banking
Be careful of using swaps to track inflation expectations, analyst says
Be careful of using swaps to track inflation expectations, analyst says
Brazil can no longer rely on consumption for growth – paper
IMF paper highlights need for Brazil to switch to investment-led growth model as infrastructure caps threaten productivity and competitiveness
Spanish paper models effects of European ‘fiscal delegation’
Supranational fiscal authority would improve welfare, authors argue
Financial constraints fuel price mark-ups, Italian paper finds
Researchers use data on Italian economy in 2010 to 2013
Fed authors construct ‘financial stability sentiment’ index
Index derives sentiment from central bank financial stability reports, finding a drop in sentiment tends to precede a “significant deterioration” of financial indicators
IMF working paper examines the impact of “de-cashing” on monetary policy
IMF working paper examines the impact of “de-cashing” on monetary policy, claiming transmission would become “easier” and “faster”
Bank and capital market financing not created equal – BIS paper
Substituting bank loans for non-bank finance after a shock appears to have a negative impact on the economy, authors find
Extended monetary easing in US has larger impact abroad – paper
IMF paper examines the impact of periods of prolonged monetary easing on risk-taking behaviour; leverage ratio and other measures of vulnerability increase
Commodity prices impact the probability of project completion in Peru – paper
BIS paper examines how a drop in oil prices affects the timing and completion of investment projects; results show mining sector in Peru is particularly sensitive
BoE paper: ‘imperfect common knowledge’ implies Taylor principle need not hold
It is not strictly necessary for a central bank to respond to temporary deviations of the economy from trend, paper finds; result challenges findings such as ‘Neo Fisherism’
Finnish paper presents two explanations for eurozone weakness
Paper looks at fall in natural interest rate and output rate shocks
Build-up of public debt causes longer recessions for EMs – paper
“Less supportive” fiscal policy makes emerging markets more prone to problems associated with accumulation of public debt; authors highlight the importance of fiscal buffers
French paper examines impact of ECB’s PSPP on bond yields
Researchers use data from the French market to examine bond shocks
Hysteresis can explain eurozone peculiarities – Eichengreen and Bayoumi
Eurozone has not responded to shocks in the way economic theory would normally imply, with the German economy tied surprisingly closely to those of ‘peripheral’ countries
HK researchers ask how much markets affect RMB fixing
Researchers test China’s assertion the exchange rate is now determined more by markets, finding mixed evidence
Successful bank nationalisations need trust in government, paper argues
DNB paper looks at effects of government intervention on bank customers’ behaviour
Norges Bank paper offers method of stress testing with fire sales
Model recognises possibility of indirect exposures, which could affect outcome of bank stress tests