Economics
Book notes: The End of Theory, by Richard Bookstaber
Bookstaber provides an entertaining introduction to agent-based modelling – a potential new front for economics
BIS paper asks what makes emerging market banks profitable
Both bank-specific and economy-wide factors affect banks’ profitability, authors find
Veteran economists weigh in on ‘rebuilding’ macro theory
Economists including Olivier Blanchard, Andy Haldane and Simon Wren-Lewis tackle the question of how – and whether – to save the DSGE model
Older workforce will reduce Danish growth, central bank says
Reforms to expand labour supply are needed to offset negative effects of demography
Eurozone countries’ manufacturing sectors are diverging, Italian paper finds
Manufacturing profits rise relative to non-tradables in Germany and Spain, but fall in France and Italy
Public debt in EU countries harms growth, ECB paper argues
Researchers find public debt crowds out investment but private debt is used efficiently
Fed paper studies inequality in three dimensions
Authors find examining three dimensions simultaneously gives new insights
Economists are misinterpreting ‘Triffin dilemma’, says BIS paper
Michael Bordo and Robert McCauley argue there was nothing certain about the collapse of Bretton Woods, but Triffin’s successful prediction led others to mistakenly reapply his theory
Fed paper sets out model of financial panics
Mark Gertler, Nobuhiro Kiyotaki and Andrea Prestipino examine banking panics in a DSGE model
Google’s Hal Varian on how technology is changing economics
Google’s chief economist talks to Christopher Jeffery about how big data and machine learning are facilitating changes in economic thinking; discusses the impact technical breakthroughs may have for central banks
Paper looks at EU attempt to increase capital supply to SMEs
Measure introduced in CRR has benefited medium but not small businesses, researchers say
Google chief economist Hal Varian offers machine-learning insights
Varian says use of single-factor equilibrium models needs to give way to dynamic state approaches; he urges central banks to experiment, even though this will result in some failures
Demography, tech reduce US natural unemployment rate – paper
Baby boomers remain active longer, and older workers record lower levels of unemployment
Early asset purchases much more successful – BIS paper
Authors find effectiveness falls over time as the shock wears off, questioning the value of long-running quantitative easing
India needs radical reforms, says academic
State ownership has gone too far but the state needs stronger capabilities in other areas, argues Vijay Joshi
Policymakers need wider range of systemic risk models – paper
Researchers attempt to combine systemic importance and systemic risk approaches
BoE paper lays out ‘financial conditions index’ for UK
Index proves valuable as a summary measure and also as an input to forecasting
Paper: foreign fund inflows raised US pre-crisis risk-taking
The Bank of Italy paper correlates data on foreign inflows with four indicators of risk
FCA mulls use of AI to tackle money laundering
Crime unit head says the financial regulator views machine learning as a complement to human judgement, not a replacement
BoE seeks to enhance stress-test model oversight
Prudential Regulatory Authority to enforce new stress-test model principles in 2018; smaller banks asked to tailor them to their operations
Diversified export markets may offset Mexican Nafta showdown
Bank of Mexico sees a failure to renegotiate the trade deal as the biggest risk to the economy
Income convergence in eurozone faltered before euro, research finds
Strong financial cycle concealed lack of productivity growth since 1990s in Spain and Italy, implying euro may not be to blame
Constancio praises Reis’s studies of monetary policy
Work helped to open “new chapter in research on expectation formulation”