Macroeconomics
Obstfeld and Taylor back dual trilemma global finance theory
Economists still need to better incorporate financial stability into their thinking, the authors argue, with the concept of a financial trilemma helping to explain recent instability
Riksbank paper studies impact of oil on world business cycle
Researchers find possible solution to macro puzzles by introducing oil shocks into a model of the global economy
Global institutions strike Mongolia bailout deal
Institutions including the IMF, World Bank and People’s Bank of China strike a deal to provide funding and other support to the slumping economy
IMF’s Werner: Latin America must keep debt under control
Western hemisphere chief says there are some concerning signs on debt, although the risk of a systemic crisis is low; region well placed to weather Fed shock
Zhou highlights need for ‘financial connectivity’ under Belt and Road
Initiative has sizeable financing demands that will require efforts to improve cross-border financial links, PBoC governor says
Dombret asks what form of international economic co-ordination is viable
It is impossible to have full global market liberalisation and national sovereignty and democracy, Bundesbank board member says
Fed report finds many people left behind by growth
Survey finds nearly a quarter of Americans struggling to pay their bills; problems concentrated in less-educated segments of the population and minority groups
French paper looks at impact of budget-neutral fiscal changes
Benefits and costs of budget-neutral changes “not equally distributed across agents”
Industrial goods inflation may be building, ECB says
Prices of goods produced in eurozone see only “subdued” growth
Considerable slack may remain in eurozone labour market – ECB
Under-utilisation of labour may affect 18% of eurozone labour force, researchers say
BIS paper offers improved real exchange rate calculation
Authors find models used to calculate real effective exchange rate do not properly account for global value chains
Capital deepening ‘virtually absent’ in US and eurozone – ECB
US and eurozone have seen major falls in net investment, an ECB article says
Israel’s Flug: action needed on productivity
Bank of Israel governor warns Israel remains a laggard when it comes to growing output per person
Trade costs limit effects of internal devaluations – ECB paper
Researcher says trade costs explain Greek failure to boost exports
Long-run rates have been lower – Chicago Fed economists
Economists note the long run downward trend among G7 countries has reversed in the past, suggesting it could do so again
PBoC’s Zhou: 6.5% growth target is ‘within reach’
Governor says he believes China’s growth target is attainable, as he urges countries to remain open to trade and investment
Thinking on global capital flows is muddled – BIS’s Shin
BIS head of research says policies to guard against excess global liquidity should look at underlying causes, not symptoms such as capital flows; Fed’s Fischer acknowledges policy spillovers
Fed paper seeks better forecasts from information inefficiencies
Paper finds it is difficult to build a better forecast on the basis of deviations from rationality in surveys, implying such inefficiencies are not “economically meaningful”
IMF remains gloomy on Brexit as UK heads for snap election
Maurice Obstfeld admits IMF was overly pessimistic on consumer response to Brexit, but says supply shock could still bite; global outlook more positive
Paper examines how sticky investment prices affect DGSE model
Findings bring the model in line with growth accounting exercises, the researcher says
BoJ paper sketches ‘vicious circle’ behind productivity traps
“Lacklustre” economic reforms and firms’ unwillingness to innovate may create a “negatively reinforcing” loop, the authors warn
Technology driving inequality in advanced economies – IMF
Technology plays “dominant role” in explaining falling labour share of income in advanced economies, study finds; globalisation more important for emerging markets
RBNZ paper develops ‘intuitive and reliable’ output gap measure
Authors turn to a “Beveridge-Nelson filter” to produce an output gap estimate that performs better than those produced by other filtering techniques
Be careful of using swaps to track inflation expectations, analyst says
Be careful of using swaps to track inflation expectations, analyst says