Macroeconomics
Icelandic paper finds evidence of rising natural rate
Authors attempt the notoriously difficult process of estimating the natural rate, using various models; rate appears to be on the rise
BoE paper drops rational expectations to solve unemployment puzzles
Replacing rational expectations with adaptive learning helps fit the standard theory of unemployment to the data, economists find
IMF to tackle effects of globalisation in 2017
Fund says it will focus on bringing the benefits of globalisation and technology to a wider section of society, amid a populist backlash against openness
BoE’s Vlieghe dismisses neo-Fisherian idea that low rates cause low inflation
MPC member says “small minority” of academics who suggest lower rates may cause low inflation do not present particularly compelling arguments
Stiglitz urges central banks to focus on credit, not interest rates
Emphasis on interest rates ignores more important question of whether credit is getting where it is needed, Nobel economist argues
RBA paper asks why companies fail
Researchers find specific features of Australian companies make them more likely to fail
Israel’s red tape is bad for business – Flug
The Bank of Israel governor says cutting back on bureaucratic regulations could help the economy grow faster with little budgetary impact
Swiss paper shows macro impacts on two safe-haven currencies
Authors surprised to find no significant impact on franc or yen stemming from euro crisis; foreign macroeconomic data has asymmetric impact
Australasia has avoided stagnation trend – RBNZ’s Bascand
Different household behaviour in Australia and New Zealand appears to have contributed to higher growth and investment
BoJ paper designs new measure of trend inflation
Author’s measure reflects the weighted average of an adaptive component and a forward-looking component
Fed’s Powell sees China as major factor in global trade slowdown
Fed governor seeks to explain global trade slowdown, citing many factors but saying China “looms large” in the debate
Central banks should sacrifice some independence – Harvard economists
A group including the UK’s Ed Balls says central banks are losing legitimacy; handing over some “political independence” could reverse the trend without damaging policy outcomes
BIS’s Shin links dollar strength to global malaise
Head of research outlines how dollar strength affects leverage globally, causing deviations from covered interest parity and potentially impacting growth and trade
IMF paper seeks to quantify debt bias
Tax systems create “pervasive” debt bias, authors find, arguing for policy action before the problem worsens
Visco hits out at lack of ‘cohesion’ among Europe’s political leaders
ECB governing council member calls for targeted structural reforms in the euro area; says a euro area finance minister must have fiscal capability and not be “another referee”
RBA paper finds it is hard to pinpoint US productivity slowdowns
Break in productivity growth trend in US appears to have happened in early 1970s, although beliefs took three decades to fully adjust, authors find
SNB paper models ‘sticky consumption’ in Switzerland
Assuming consumption habits are slow to change helps produce more robust results than other methods, author finds
Fischer examines growth dilemma
Fed vice-chairman says behaviour of inflation and output as economy normalises may provide some answers
Barro and Summers wrestle with productivity puzzle
Veteran economists seek to offer explanations and policy prescriptions for strong employment and weak growth in the US and elsewhere
Oil price rises and US GDP growth have ‘complex relationship’ – paper
Paper studies interaction of oil price and economic growth in US from 1875 to 2016
Hedging demand can cause covered interest parity violations – BIS paper
US dollar forward hedging demand can cause covered interest parity to fail even when markets are calm, authors say, helping explain this post-2012 anomaly
Lagarde welcomes ‘major policy shift’ in Saudi Arabia
IMF managing director says efforts to reduce reliance on oil are “very welcome”, although Gulf countries more generally need to continue their fiscal adjustment
Commodity prices create ‘strong pressure’ to lower interest rates – paper
Policy response to commodity price fluctuations has been stronger in the US, paper finds; commodity price shocks follow two cycles, with the most recent having impacts on policy rates
Rand volatility not driven by South African economic ‘surprises’ – IMF paper
IMF working paper finds that surprises in commodity prices, domestic politics and US economics impact the volatility of the South African rand rather than economic surprises in South Africa or China