Research
Monetary policy's 'new normal' will challenge central bank independence, say IMF staff
The ‘new normal' for monetary policy, including taking account of macro-prudential concerns and cross-border spillovers, will also complicate accountability and challenge central bank independence
ECB paper tackles liquidity ‘free-rider’ problem
Working paper highlights ‘excessive liquidation’ caused by financial intermediaries free-riding on other firms’ liquidity holdings, but says macro-prudential policy can create ‘constrained efficiency’
IMF says real interest rates have fallen sharply since 1980s
Rise in emerging market savings rates, increase in demand for safe assets and recent fall in yields in advanced countries are the major contributors to real rate decline since the 1990s
Countries in monetary union should index sovereign debt to GDP growth
Bank of England working paper finds GDP-indexed bonds should be used more widely, especially by countries with volatile GDP growth or in monetary unions
Fannie and Freddie served as 'disciplining device' in sub-prime market
US mortgages eligible to be bought by Fannie Mae and Freddie Mac before the financial crisis had 'similar ex ante risk characteristics' to other mortgages, but performed better during crisis
Bank of England paper estimates effects of monetary policy
A new approach outlined in a Bank of England working paper avoids three major pitfalls in estimating monetary policy's effect on growth and inflation
Richmond Fed study shows 'dramatic crossover' in payment methods of US citizens
Study evaluates Fed data tracking 2,500 participants making close to 13,000 payments during three days in October 2012, shows many seniors sticking to mail as main payment method
Too big to fail subsidy was worth up to $300bn in eurozone in 2012, IMF says
A report in this year's Global Financial Stability Review says that while excluding the possibility of government support may not be possible, ways should be found of making banks pay for it
ECB paper finds US resolution authority has not solved too-big-to-fail problem
Research uses creation of US Orderly Liquidation Authority as ‘quasi-natural experiment’, finding many banks are disciplined but the largest still do not believe the threat to be credible
BoJ review dissects inflation expectations
Economists from monetary analysis department say BoJ communication has generated a 'spike' in expectations around 2%, but dispersion is still ‘substantial’
Czech paper examines strength of link between financial and real sectors
An expansion of credit from banks ‘supports industrial production' in small open economies such as the Czech Republic, working paper finds
New York Fed study finds TBTF banks take on more risk
Study uses a rating agency measure of government support and finds it correlated with the size of banks' impaired loan ratios
Forex interventions can lead to banking credit boom, paper finds
BIS paper shows that central bank intervention in forex markets can end up fuelling an expansion in credit to the private sector in emerging markets
Poor co-ordination on capital controls could prove ‘highly detrimental’, paper warns
Paper presented at RBA annual conference finds significant spillover effects from US monetary policy and calls for greater co-ordination of attempts to control capital flows
Danish paper examines effects of household leverage
Over-leveraged households saw the biggest hit to their consumption when the 2008 financial crisis struck, but the relationship broke down as the crisis continued, working paper finds
Weaker currency boosts Australian growth, study shows
A 10% drop in the value of the Australian dollar would boost economic growth in the country by 1% after a couple of years, RBA paper finds
Evaluation of Luxembourg paper produces ‘encouraging’ results
Research published by the Central Bank of Luxembourg finds the monthly indicator it uses to forecast GDP delivered a 'satisfactory' performance between 2007 and 2013
Colombian paper finds wholesale funding can increase financial sector fragility
Monitoring credit funding sources could provide an additional tool to warn against banking disruptions, paper shows
ECB paper sees merits in fiscal activism at ZLB
Research calls for a policy-maker who cares more about stabilising inflation, relative to government spending, than the private sector when nominal interest rates are at zero lower bound
More bank capital means banks lend more, paper finds
More capital means more credit - but greater supervisory capital constraints mean bank credit grows more slowly than when banks are less constrained
Sovereign credit ratings have asymmetric impact, ECB paper finds
Working paper finds market volatility depends on whether the rating was an upgrade or a downgrade; identifies channels of contagion between countries
Riksbank paper examines dynamics of foreign funding by Swedish banks
Study finds currency hedging needs of institutions and companies incentivise Swedish banks to issue securities in foreign currency
Slovakian economists build new framework for estimating output gap
Researchers combine a variety of methods and information sets to ‘substantially reduce’ the uncertainty of output gap estimates on a ‘policy-relevant’ horizon
Target2 'filled in' balance of payments gaps during euro crisis, NY Fed paper finds
Federal Reserve Bank of New York study finds adjustment to the pullback of private capital during the euro crisis made less harsh by Target2