Financial cycle
Markets starting to reflect ‘tenacious’ inflation, says BIS
Swings in markets highlight investors’ struggle to understand outlook, quarterly review says
Fed paper explores information problems in financial panics
Tight liquidity can cause investors’ beliefs to become “systematically divorced from fundamentals”
BoE paper models macro-prudential spillovers
Agent-based model sheds light on how housing market policies affect different groups, authors say
RBA develops new method of modelling financial sector
Approach takes Martin model “beyond the existing macroeconometric frontier”, say researchers
Foreign vulnerabilities can affect domestic growth – BoE paper
Study of ‘GDP-at-risk’ shows financial factors overseas can lead to worse outcomes locally
Inequality can worsen recessions – BIS paper
But authors say there is little evidence that income inequality affects consumption in normal times
Macro-prudential tools can boost long-run growth – BoE paper
Authors develop theoretical framework linking financial frictions to long-run growth
Rising rates could endanger emerging market recovery, IMF warns
“Divergent recovery” likely to create financial stability challenges, report says
A rebuttal of Philip Turner’s criticism of the BIS ‘house view’
Robert Pringle critiques the key findings raised in Philip Turner’s occasional paper, ‘The new monetary policy revolution: advice and dissent’
Kenya’s central bank transfers $45.6m to government
IMF approves pause in fiscal tightening as Kenyan authorities deal with impact of pandemic
Shadow banks play key role in business cycle – BoE paper
Contraction in securitisation can spill into wider credit conditions, researchers say
Sectoral shocks drive non-bank credit cycles – BIS paper
Authors explore interaction of bank and non-bank credit cycles
Debt-service ratio limits have greatest welfare benefit – BoE research
Authors find macro-prudential tools can also boost the transmission of monetary policy
BIS paper pins down causal impact of capital flows
Study based on confidential BIS data finds capital controls can help prevent overheating
Dollar funding drives global house price movements – BIS paper
Non-US banks often depend heavily on dollar funding to issue mortgages, authors show
Eurozone credit tightened in Q3
Worsening economic outlook boosts borrowers’ credit risk, says the ECB
Transparency on financial stability not always optimal – Fed paper
Author finds upside to opacity, but says central banks may face time inconsistency problem
BIS paper models credit booms and busts
Authors outline heterogeneous-agent framework that could support macro-prudential policy
Financial indicators can warn of European growth risks – ECB paper
Index that aggregates financial variables in non-linear way provides most information – researchers
BIS economists test fixes for credit-to-GDP gap
Measure has drawbacks as early warning sign, but proposed solutions have problems, authors find
IMF suspends country assessments until April 2021
Resumption of assessments will need to be “gradual” and undertaken flexibly, says fund
Hélène Rey on macro-financial distortions and ‘phase 2’ of Covid-19
The LBS economics professor discusses monetary policy and financial exuberance, debt restructuring, and the use of machine learning to optimise ‘early-warning’ models to inform macro-prudential policy
Financial shocks explain ‘large share’ of US business cycle – BoE paper
New identification method helps avoid pitfalls encountered by earlier research, author says
BoE paper explores global financial cycles since 1880
Cycles in credit and housing have become more pronounced, but only for some economies