Research
BoE paper suggests action when markets unsure about macro-prudential policy
BoE economists say policy-makers should be more active in times of uncertainty in the private sector, suggesting it need not make them "more cautious"
Responses to commodity shocks only have ‘small’ impact on investment, paper finds
Flexible inflation-targeting frameworks and exchange rates are ‘essential’ to limit the macroeconomic impact of commodity price volatility
Bank of Italy growth indicator ticks up
Italian central bank’s ‘timely’ index shows eurozone GDP growth continuing in December, with the indicator reaching triple its level of a year ago
Floating exchange rate has led to more volatility, Norwegian paper says
Moving to inflation targeting regime prompted rise in volatility in nominal exchange rates, research says; no depreciation or appreciation trends evident, however
Haircuts on sovereign debt ‘open the door for more leverage’, research finds
Prolonged low interest rates also contribute to an overleveraged economy in case of crisis; though in times of ‘low crisis’ they can help decelerate fiscal adjustment
BIS paper finds investors take simplistic approach to emerging market risks
Authors find investors seem to divide countries based not on fundamentals but on whether they are deemed an emerging market
Dutch paper explores price level dispersion
‘Idiosyncratic shocks’ have greater impact on price level dispersion within the eurozone than in the US, authors say
Research analyses Irish banks’ connections to global financial system
An article in the latest Central Bank of Ireland quarterly bulletin maps the networks formed by Irish banks’ connections to each other and to the global financial system
Turkish inflation seen returning to 5% in 2018
Latest projections from the Central Bank of the Republic of Turkey suggest headline inflation will only return to target in 2018, after it overshot October forecasts, rising to 8.8%
Kansas Fed researchers bridge gap between forward guidance data and theory
Working paper identifies empirical effects of guidance at the zero lower bound, before finding a standard model of price rigidity largely replicates the results
BIS paper says trade finance impacts global spillovers
Working paper emphasises importance of including trade finance when modelling global shocks, finding variations in price stickiness are important
Reserve accumulation can be inflationary, ECB paper says
Working paper examines the allocation of special drawing rights in 2009 to separate out the inflationary effects stemming from an increase in the monetary base and moral hazard
BoJ research estimates impact of Olympics on growth
Authors suggest Tokyo Olympics will boost Japan’s annual real GDP growth by 0.2-0.3 percentage points from 2015-2018, as tourism and construction investment picks up
BoJ regional research divisions see ‘moderate’ recovery
Nine regions report the economy has ‘continued to grow’, often at a ‘moderate’ pace, in the past three months; some note impact from emerging markets slowdown on exports and production
IMF paper seeks to capture complexity of financial development in new index
Research presents six ‘subindices’ measuring the depth, accessibility and efficiency of financial institutions and markets, which are rolled into an ‘overall measure of financial development’
ECB paper quantifies spillover from sovereign to corporate credit risk
Research studies direct spillover effects using credit default swaps and data on 226 firms from 15 European countries in aftermath of first Greek bail-out
Bundesbank paper explores interbank market functionality during crisis
The German interbank market did not fail, per se, in the 2007-8 financial crisis, a Bundesbank discussion paper argues; bank fundamentals determined ability to roll over interbank positions
Paper finds positive impact from Dodd-Frank swap rules
Compulsory trading via swap execution facilities has boosted liquidity and cut trading costs in the market for interest rate swaps, working paper published by BoE finds
BoJ paper: inflation expectations do not match target
Study of ‘dissonance’ in forecasts between economic agents and the central bank finds people only believe the BoJ will hit its target in the short to medium term – after that, inflation drops
BoE paper seeks to improve forecasts with adaptive model
Using an adaptive model in conjunction with heavy-tailed t-distributions allows authors to deliver ‘substantial improvements’ in forecasting inflation
Growing case for planning Cambodian de-dollarisation, paper says
Cambodia needs a strong macroeconomic framework for de-dollarisation to be successful, research says; economic and political stability a good starting place
Brazilian paper charts impact of inflation signal on expectations
Agents update forecasts immediately after new information is released and the impact of new information is dependent on ‘precision’, a working paper suggests
Monetary policy easing increases systemic risk-taking, paper finds
Brazilian domestic monetary policy is more statistically significant in this regard than foreign monetary policy, working paper suggests
Spanish paper models synergies between demand and supply policies in monetary union
Working paper model sees benefits in jointly implementing structural reforms in the ‘periphery’ of a union, with fiscal expansion in the ‘core’ and forward guidance on interest rates