Research
Synthetic financial cycle model allows crisis predictions, paper argues
A model of a synthetic financial cycle performs better than the credit-to-GDP gap in predicting financial crises, a European Central Bank working paper argues
Norges Bank memo presents indicator of systemic stress
Staff memo outlines ‘composite indicator of systemic stress’ to help with decision on when to lower the countercyclical capital buffer
Flaws in banking laws common across countries, working paper finds
IMF working paper examines the weaknesses in specific banking laws, concluding they are not country specific; seeks to provide a blueprint for ways to improve
IMF paper challenges idea of debt threshold effect
Countries with high levels of public debt can grow just as fast as their peers, provided the debt is on a downward trajectory, research finds
Danish paper explores prevalence of interest-only mortgages
Interest-only loans lead some families ‘to save less and increase their leverage’ assets, which could pose a financial stability risk, research shows
German reforms did not create eurozone imbalances, paper finds
German model illustrates the positive effect of structural labour reforms between 1999 and 2008 on GDP, consumption, investment and employment, but also the eurozone more widely
ECB paper makes case for Bayesian model averaging in stress-test models
Working paper highlights the differences between using Bayesian model averaging and a series of handpicked equations
Maltese not ‘aggressive’ in restructuring assets in 2014
Financial Stability Report indicates core domestic banks re-balanced assets to boost returns but were not aggressive in their approach
Research questions whether Asia development has permanent effect on long-run price of commodities
RBA paper reveals that developments in Asia has had a significant effect on the level of commodity prices, but the increase was smaller than first thought
DNB sizes up pension fund recovery plans
DNB assessment of recovery plans highlights funds do not intend to cut pensions in order to achieve new regulatory requirements
RBA economist proposes ‘survival model’ of banknote life
The research discussion paper outlines an alternative method of predicting how long banknotes will last, finding the ‘survival model’ produces less volatile estimates
Research maps Norwegian challenges if oil prices stay low
Economic commentary considers how the increase in oil prices over the past decade has affected Norway in a bid to understand how the recent price drop could play out
BIS paper studies impact of Swiss CCB on quality of credit
Working paper finds activation of countercyclical capital buffer affected the composition of mortgage lenders in two key ways
UK payments have room for improvement, report finds
Report identifies priorities for better payments among consumers, businesses and government, finding desire for faster, more flexible payments with less room for error
Economics needs a ‘replication journal’, paper argues
Natural and life scientists spend considerable time attempting to replicate the results of earlier research; economics could benefit from a similar approach, St Louis Fed paper argues
Household debt had modest impact on US consumption, research finds
Household debt in the US accounted only slightly for the decline in household consumption nationally in the 2000s, research published by ECB finds
BIS paper finds emerging market corporations exploiting carry trade
Study of emerging market foreign currency-denominated bond issuance by Bruno and Shin finds corporations appear to be issuing bonds as part of a carry trade, rather than financing investment
IMF paper explores capital inflows and credit growth
Working paper finds an increase in capital inflows can fuel credit growth, but it depends on their composition; no ‘significant’ connection with foreign direct investment
Eurozone QE has ‘significantly increased inequality’, Bundesbank paper argues
Asset price changes following the introduction of eurozone quantitative easing have largely benefited the wealthiest households, a Bundesbank working paper says
Equity price growth rate ‘leading indicator’ of bank loans, French paper argues
Comparing two models of domestic credit dynamics to recent French data shows the importance of equity price growth rates, according to a Banque de France working paper
Capital controls ineffective at handling policy trilemma, ECB paper finds
Emerging market capital controls have a limited impact on monetary policy trilemma variables and come with spillover effects, the authors warn
Inflation targeting should be improved, not replaced, RBA paper says
Rather than a ‘fundamental re-engineering’ of inflation targeting, central banks should adopt a flexible approach that pays some heed to output, authors argue
Limited liability distorts incentives for disaster planning, paper argues
Consequences of recent events with catastrophic financial ramifications have been greatly aggravated by policy-makers’ failure to prepare, says ECB working paper
Strategic default helps explain crises in advanced economies, ECB paper finds
Sovereign debt and financial re-allocation are linked by the use of government bonds as collateral on the interbank lending market, paper notes