Research
ECB paper explores fiscal adjustment in stressed countries
Fiscal corrections have been ‘more costly’ in contractionary times in Greece, Ireland, Portugal and Spain over the past 50 years, paper suggests
Heterogeneous beliefs may weaken effect of forward guidance, paper argues
Fixed-date and state-contingent guidance by the Federal Reserve led some market expectations to converge, but heterogeneous beliefs about inflation and consumption persisted
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
Turkish paper explores productivity differentials
Countries caught in middle-income trap suffered lower productivity gains than others that had ‘graduated’ from it, finds research focused on period from 1950-2005
Eurosystem’s asset purchase programme should increase growth by 1% annually, paper says
The Eurosystem’s asset purchase programme could increase growth and inflation by 1% annually for two years, a working paper from the Bank of Italy predicts
BoE paper explores money and credit at sectoral level
Working paper models sectors separately before ‘knitting’ them together; authors use framework to examine financial shock and use of quantitative easing to tackle it
Chinese slowdown could be harder than many economists think, paper argues
Chinese potential growth could be lower and its coming slowdown harder than many think; growth could slow to 5% annually by 2020, says French working paper
BIS paper offers method of overcoming time inconsistency in macro-prudential policies
Macro-prudential policies are necessary to prevent finance amplifying imbalances, but regulators struggle to credibly commit to policies, authors warn
European real effective exchange rates are hugely misaligned, paper argues
Real effective exchange rates for European Union countries do not correspond to national economic fundamentals, a working paper from the Bank of Lithuania argues
Emerging markets appear less susceptible to global contagion than advanced economies – BIS paper
Working paper explores whether central banks can still manage domestic financial conditions despite globalisation; isolates ‘contagion’ component in bond yield dynamics
Bundesbank paper explores why banks may lend too much
A limited number of banks may engage in excessive lending, and those that do are more likely to rely upon capital support, says Bundesbank paper
Increases in securitisation may lead to under-pricing of risk, study argues
Increased asset securitisation reduces premia on bonds and equities, Bank of Spain working paper says; decrease in cost of risk may not be related to an actual fall in risk
CCPs’ initial margins ‘significantly’ raise cost of repo funding, study argues
Initial margins charged by central clearing counterparties (CCPs) can increase the cost of funds raised in repo markets, a Bank of Italy paper argues
IMF working paper explores spillovers between United States and eurozone
Spillovers from the eurozone to the US have been ‘considerable’ since 2014, reflecting policy easing in Europe, IMF paper notes
BoE paper explores link between mortgage debt and consumption
Tighter credit conditions and concern over debt repayments may have led to a 2% drop in aggregate private consumption following the crisis, working paper says
BoE committee sees benefits of moving CCB in small steps
The Bank of England's Financial Policy Committee leaves the CCB at 0% but notes the system is ‘moving into a normal phase of the credit cycle’ and sees potential advantages in using smaller increments when the time comes
Fed policy has ‘little impact’ on labour market, paper says
Paper published by Minneapolis Fed argues there is little the Fed can do to restore the level of employment relative to the population that prevailed before the crisis
Credit growth has had significant impact on EM growth, IMF paper says
IMF paper explores relationship between the level and composition of credit growth and real GDP growth across 31 emerging market economies
Economists expected lower inflation under Yellen than Bernanke, SNB paper finds
Sample of economists from ‘reputable academic and policy institutions’ on aggregate expected slightly lower inflation under Yellen compared to if Bernanke had stayed on
Global factors harming domestic policy transmission in Asia, IMF research finds
Authors find global factors help to explain why bank funding in Asian economies has such a limited role in transmitting monetary policy
BoE paper extracts inflation expectations from market rates
Market rates are an imperfect measure of expected future inflation, say economists, who break them down into constituent parts, stripping out risk premia and the ‘wedge’ between RPI and CPI
Botswana research weighs impact of various instruments on credit
While interest rates may be more effective at influencing credit than reserve requirements, more ‘direct’ macro-prudential measures could be even better, Botswana article finds
Global indicators can boost inflation forecasts in short term, paper finds
Author uses global inflation indicators and Brent oil price to augment domestic inflation forecasts in 523 countries, finding both improve accuracy
Lithuanian paper explores macroeconomic imbalances
Working paper advocates a more refined analysis of the misalignments in current accounts and real effective exchange rates for the macroeconomic imbalance procedure