Research
Capital flows are 'fickle' and always have been, paper finds
Capital flow volatility is a fact of life for all economies at all points in time, say IMF researchers, who point out that bigger advanced economies are best placed to deal with ebb and flow
Norwegian paper explores financial stability trade-off
Working paper identifies trade-off between increasing rates to mitigate financial imbalances and lowering rates to reduce the risk of bank insolvency
Czech paper dissects central bank inflation reports
Researchers find the inflation reports produced by a sample of eight central banks are ‘generally of good quality’ but warn their analytical power cannot be taken for granted
BIS researchers use profit-elasticity method to measure China bank competition
Working paper finds competition has increased among China's banks; new PE indicator produces result consistent with financial sector reform
Terms of trade volatility exacerbates shock effects for small open economies
Research conducted at the Reserve Bank of Australia says big fluctuations in terms of trade compound the effects of a terms of trade shock in small, open economies
LCRs in low-liquidity settings lead to big externalities
RBA research paper suggests introducing a liquidity coverage ratio in certain settings leads to large liquidity premiums and pushes the risk-free rate to the floor of the interest rate corridor
Unemployment strongest predictor of mortgage default in the US
Atlanta Fed research finds that individual unemployment increases the probability of mortgage default by 5 to 13 percentage points compared with average sample
Swelling profits explain rebound in risk appetite, San Fran Fed paper suggests
Research indicates corporate profit growth explains 40% of the decline in the spread between risky and risk-free bonds, according to economic letter by research vice-president
Break-even value of PMI is not 50 but 44, RBI working paper suggests
Wholesale Price Index inflation turns positive when PMI exceed 44, according to research; paper also finds that PMI predict the movements of final WPI
NY Fed research constructs composite model for core inflation
Paper finds that price changes in core goods and services are driven by different forces; capturing this distinction enables researches to map core inflation more accurately
Surge in excess reserves drives overnight interbank rate to ‘floor of corridor'
Dynamics in the overnight money market are in line with ‘expected consequences of market stresses and unconventional monetary policies' according to RBA working paper
‘Tiered' clearing networks increases CCP risk, study finds
Complex clearing networks ‘appear to increase' some risks faced by CCPs, according to working paper investigating the ‘topology' of such networks
Employment losses have repaired corporate balance sheets, paper argues
Differences in post-crisis employment among EU members are largely driven by need in many countries to adjust balance sheets, according to IMF working paper
Boston Fed paper flags need for research into debt dynamics in recovery period
Research into the relationship between debt and consumption to the household level is ‘limited’ and does not ‘directly speak’ to the United States' recent weak performance, says discussion paper
NY Fed blog post points to fiscal implications of Fed policies
NY Fed blog post notes Fed policy impact on government fiscal position is much broader than the direct influence remittances from Fed earnings have on government finances
UK-French paper examines monetary policy implications of wage changes
Researchers find that wage changes are clustered at the beginning of the year in many European countries, but this makes ‘little difference’ to the optimal policy response across quarters
Canadian quarterly review outlines toolkit for analysing current economic performance
Summer 2013 edition of the BoC's review contains four articles outlining the bank's latest thinking and methods of analysing current economic trends at home and abroad
ECB paper finds capital controls can increase stock price volatility
Research paper finds that a tax on capital inflows can stabilise currency markets, but amplify shocks in single-country stock markets
Fed researchers find effects of QE ‘minimal' without guidance on rates
Paper by senior economists from the New York and San Francisco Feds argues that signalling a rate rise will be far more meaningful than communication on when asset purchases might come to an end
BIS paper weighs up early-warning indicators
Working paper examines which indicators are most effective at foreshadowing banking crises; uses a new statistical method based on particular policy requirements
Kenyan governor urges bond market reform
Njuguna Ndung’u calls for a wider trading platform in the secondary market to incorporate OTC products; criticises the ‘slow pace’ of reforms so far
Sector-specific variables more relevant than thought in determining default risk
The effect and magnitude of risk drivers across sectors is highly heterogeneous, which should be taken into account when designing stress-testing analytical tools, research paper argues
Croatia among EU members whose spreads are most affected by fundamentals
While spillovers from external shocks remain the dominant factor in spreads EU-wide, Croatia is among those where fundamentals are playing an increasingly influential role
Bofit paper says depositor sensitivity to market rumours increased in crisis
Bank of Finland discussion paper analyses market discipline in Central European countries; finds depositors were increasingly influenced by market rumours during the financial crisis