Foreign vulnerabilities can affect domestic growth – BoE paper

Risk modelling

Financial vulnerabilities overseas can lead to worse outcomes for economic growth at home, research published by the Bank of England finds.

In the working paper, Simon Lloyd, Ed Manuel and Konstantin Panchev explore ‘GDP-at-risk’ in a quantile regression framework. The approach allows them to estimate the relationship between various indicators and the distribution of GDP growth outcomes “over time and across countries”.

They show that foreign financial vulnerabilities “significantly influence

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