Economics
Credit contractions are significant cause of unemployment, researcher says
Data from 20 OECD countries shows that contractions in credit affect total, youth and long-term unemployment measures, a working paper from the Bank of Austria argues
Climbing ‘Mount Economy’
The BIS’s quest for financial stability-oriented monetary policy throws up questions not only about decision-making but also how one should think about economics, as Claudio Borio explains
BoE research finds support for Phillips curve in micro data
Authors turn to direct measures of firms’ expectations and employ new instrumental variables in search of empirical support for the Phillips curve
Blanchard sees reformed DSGE as ‘central’ to future of macroeconomics
Former IMF chief economist says DSGE models are “seriously flawed” but “eminently improvable”, and will have a leading role to play in the future
Icelandic paper finds ‘striking’ ties between financial cycle and real economy
Authors identify strong financial cycle linked to global factors, which impacts macro variables including consumption and government spending; paper suggests range of policy responses
Croatian National Bank sees inflation recovering this year and next
Annual CPI inflation fell to –1.8% in May, but the central bank expects it to pick up in the coming months, eventually rising to 1.2% in 2017
IMF paper examines drivers of India’s disinflation
‘Backward-looking’ expectations and domestic institutional structures amplified shocks, paper says; only 15% of India’s deflation is attributed to a decline in oil price
Argentinian central bank removes $5m dollar conversion cap
New measures aim to make it easier for businesses to acquire dollars; bank removes cap on dollar conversion and reduces paperwork involved
Money market interactions can explain behaviour of interest rate spreads, researchers argue
Paper analyses the interplay of unsecured and collateralised money markets; information obtained “can explain behaviour of interest rate spreads”, authors say
IMF paper explores link between imports and pro-cyclicality of productivity
Research finds firm-level import decisions explain “non-trivial” fraction of fluctuations in aggregate productivity in South Korean manufacturing sector between 2006 and 2012
BoJ research uses ‘global game’ to explain zero inflation
Model of monopolistic competition implies co-ordination between firms may lead to zero inflation
Regulation may be fuelling covered interest parity breakdown – BoJ economists
Authors link puzzling breakdown of CIP to regulations including liquidity constraints, as well as divergent monetary policies
Philadelphia paper explores drivers of bankruptcy decisions
Working paper examines the extent to which the structure of a household’s balance sheet and income statement influences its decision to file for bankruptcy in the wake of an income shock
IMF paper offers alternative explanation for Venezuelan inflation
Working paper argues fall in oil prices combined with restrictions in foreign exchange best explains hyperinflation in Venezuela, rather than a self-reinforcing rise in expectations
IMF urges Abenomics ‘reload’ as BoJ struggles
Fund tells Japanese authorities to be clearer and more systematic in setting policy, as government unveils new stimulus; working paper suggests alternative to helicopter money
ECB bulletin says institutional reform important for increasing resilience
Governing institutions in eurozone countries need reform, the ECB says; Finland’s institutions are among very best in OECD but those of Greece and Italy are close to worst
ECB data reveals changes in eurozone wage rigidity
ECB publishes its third survey of wage dynamics in the eurozone; it argues data is “crucial” to designing monetary and other macroeconomic policies
IMF’s crisis performance criticised by internal review
Report evaluates IMF’s handling of eurozone crises from 2010 to 2013; work during programme design and implementation described as ‘uneven’ and concerns raised over political pressure
Dutch paper explores information content of asset prices for inflation
Working paper finds high asset prices can be an indicator of either high or low inflation, though more commonly the former; considers information content of range of financial variables
European banks’ structure helps drive dollar-denominated debt issuance – paper
Bank of Spain paper examines the most prolific dollar-denominated debt issuers among European banks, finding issuance is driven by range of factors, including desire to hedge
Irish central bank warns of ‘negative and material’ impact from Brexit
Quarterly bulletin discusses channels through which UK vote to leave EU will affect Ireland; economy expected to grow by 4.9% this year and 3.7% next
Bank of Italy paper aims to improve on EC current account model
Research offers a new model of external adjustment; the EC’s model tends to mis-state cyclically adjusted current account balances of large eurozone economies, researchers argue
IMF paper examines impact of debt restructurings on growth
Growth usually declines after debt restructurings, but it can boost performance if the country exits a default spell, the authors find
Atlanta Fed paper demonstrates signalling mechanism in mortgage market
Lenders in mortgage market able to reveal quality of loans by delaying trade, authors find; loans sold five months after origination less likely to default