Economics
Riksbank paper finds BVAR models can outperform DSGE
Bayesian vector autoregressions often produce better forecasts than judgement-based or DSGE-based options, authors find – but DSGE is still more popular for policy-making
PBoC sets up renminbi internationalisation research centre in Singapore
The new Centre for Renminbi Internationalisation Studies (CRIS), launched today in Beijing, is a prestige victory for Singapore as it aims to position itself as a leading international RMB hub
Singapore official points to benefits big data offers insurers
Insurers can gain a competitive edge by harnessing insights from big data when designing products, the Monetary Authority of Singapore’s Chua Kim Leng says
Economists still scrambling to adapt models to lower bound
Many traditional economic models perform poorly now major economies are near the effective lower bound, but economists at the RES annual conference offer a range of solutions
‘Compositional’ drag on wages set to fade, BoE article finds
Labour force composition has changed markedly in recent years, putting downward pressure on wages, but recent data implies the effect may soon dissipate, researchers say
Central Bank of Malta revamps main structural model
Version three of the ‘Stream’ model captures the interlinked nature of the fiscal and financial sectors, with extra detail added to the financial block and new data used for estimation
Rajan flags pitfalls of short-term thinking
RBI governor extols the virtues of macroeconomic stability, defending the central bank’s strict stance on inflation and calling on the government to stick to its fiscal consolidation plans
IMF cuts global growth forecast on back of EM challenges
Maurice Obstfeld says emerging markets and developing economies account for more than two-thirds of revisions; largest changes come in Brazil, where the MPC meets today
BIS deputy warns all economies must manage ‘sudden floods’ of capital
Advanced economies face the same floods of capital as emerging markets, and may be hit by other spillovers that are not yet well understood, Luis Awazu Pereira da Silva says
BoE researchers model trend inflation with ambiguity
Researchers develop a model featuring positive trend inflation determined in part by the degree of ambiguity around central bank actions
Rajan picked as BIS board vice-chair as he calls for global ‘rules of the game’
RBI governor chosen to take over position Masaaki Shirakawa vacated in 2013; delivers lecture in Frankfurt calling for global ‘rules of the game’
BoE Court recommends forecasting rethink
Review of forecasting sheds light on strengths and weaknesses of central bank’s approach; recommends more systematic performance evaluation and new modelling techniques
Economists challenge foundations of monetary economics
‘Neo-Fisherian’ approaches use standard New-Keynesian models to show that cutting interest rates will produce lower, not higher, inflation – and the result is surprisingly difficult to overturn
RBI economists attempt to pin down India’s natural rate
Researchers lend support to monetary policy by estimating natural interest rate; results imply the policy rate is now set more appropriately for tackling inflation
Micro-data matters for unemployment, says BoE’s Broadbent
Deputy governor becomes latest economist to stress importance of micro data for macro policy, warning overreliance on ‘simple aggregates’ may lead central bankers astray
Riksbank is working on ‘big data’, says Skingsley
Deputy governor speaks to Central Banking about bringing together experts on big data, the possibility of leaning against the wind, risks in the housing market and more
BIS paper captures financial shock using five DSGE models
Authors from the Federal Reserve find even models with a common core produce very different estimates of the spillovers of a financial shock to the real economy
BoE officials say UK may be starting to throw off productivity woes
There are signs the UK may be emerging from the ‘long, dark tunnel’ of weak productivity, officials tell the Treasury Committee; government’s minimum wage plans may be a positive factor
European leaders strike Greek deal but hurdles remain
All-night session ends in Greece agreeing to a tough reform package, but finance ministers continue to debate possible bridge financing and national parliaments must still give green light
Greek crisis enters critical weekend
Negotiations enter final days, with European authorities scrambling to assess whether new proposals go far enough; Greece has backers, but Germany must still be persuaded
ECB paper finds periphery most affected by credit shortage
Peripheral economies appear to suffer a greater slowdown of productivity than their northern neighbours when facing a squeeze on credit, research published by the ECB finds
Greece closer to default as creditors throw out latest proposals
Leaked copy of counterproposal by Greece’s creditors complete with red-inked changes shows agreement as far away as ever, with less than a week until major IMF repayment
NBER paper seeks better model of trend inflation
James Stock and Mark Watson use disaggregated data on sectoral inflation with time-varying weights, finding this can produce a more accurate model of inflation’s long-term trend
BoE launches ‘Bank Underground’ research blog
Blog provides platform for researchers to voice more controversial ideas; comes alongside rebranded staff working papers, written with ‘hands off’ approach from senior managers