Research
‘Belief-twisting' macro shocks can reverberate through generations, research finds
Banque de France researcher examines how households' expectations can take decades to recover after a macroeconomic shock
Polish paper examines banks’ risks when state safety net grows
Study finds that banks in central Europe take higher levels of risks under a larger deposit insurance scheme; less so in times of financial crisis
The Dutch are ‘poorly informed’ about country’s debt
Central bank survey finds that the Netherlands’ population underestimates the size of the country’s public debt, and wrongly attributes its creation to support for banks and other European governments
ECB paper seeks to boost predictive power of macroeconomic models
Research analyses and seeks to supplement the predictive power of the three main families of macroeconomic models – DFM, DSGE and VAR – used by central banks
Bank of Italy research finds evidence of investors ‘waking up’ to sovereign risk
Working paper suggests widening eurozone sovereign spreads caused by ‘complacent’ investors suddenly paying closer attention to risks
Banque de France devotes 17th Financial Stability Review to OTC regulation
Biggest players in international financial regulation contribute to French central bank's compendium of the latest thinking on OTC derivatives regulation
SNB paper analyses relationship between monetary policy and financial integration
Study finds that monetary policy can have a larger effect on output and inflation under conditions of greater financial and trade integration
Bolivian hyperinflation re-modelled using ‘Bayesian approach'
Paper from Latin American monetary studies centre takes new approach to modelling short-lived episodes of hyperinflation
Czech bulletin dissects monetary policy transmission
An economic research bulletin compiled by the Czech National Bank explores relationship between monetary policy and real economy in five articles
SNB research finds Swiss franc is only safe haven against some currencies
Paper suggests Swiss franc is a safe haven from euro but not from other major reserve currencies; says this may be down to small size of market
ECB working paper puts forward new model for use in stress tests
Working paper based on risk-return optimal program in which banks aim to maximise risk-adjusted returns while taking into account regulatory capital and liquidity constraints
ECB research finds exchange rate decoupled from fundamentals
Paper suggests euro exchange rate during the European sovereign debt crisis ‘danced to its own tune’, but volatility was impacted by politicians’ statements
Paper finds pro-cyclical labour market in the great recession
Researchers claim US labour force participation since 2007 violates conventional wisdom on acyclical behaviour
Colombian paper flags danger from abnormal credit growth
Credit expansion does not always imply excessive risk-taking, but abnormal credit growth causes greater risk-taking and contributed to Colombia’s financial crisis in the late 1990s, paper finds
Bundesbank research says sovereign default can be the best option
Discussion paper finds it may be optimal to choose a costly default over legal repayment, but only when a country is facing disaster
French paper warns of banks precipitating crises through hoarding
Research develops new ‘domino effect’ model, examining how banks may bring about crises by attempting to protect themselves
New DSGE model finds anticipated 'low for long' policy can cause a boom
Finnish paper, inspired by US policy of the early 2000s, finds combination of too-low-for-too-long interest rate policy and optimism leads to an increase in overall leverage
Interest rate forecasts ‘constrain’ central banks
Norwegian paper finds that Norges Bank and Reserve Bank of New Zealand are ‘reluctant to deviate’ from interest rate paths they have previously published
IMF researcher proposes new method for top-down stress testing
New, simple methodology for structural market-based top-down macro stress tests aims to overcome onerous data requirements
Sri Lankan central bank reveals inflation spike in 2012
Sri Lankan annual report says economic growth, while still strong, fell in 2012 while inflation rose sharply; central bank increased reserves by 15%
Polish paper scrutinises interest rate holds
Research finds that central banks keep interest rates unchanged on majority of occasions; proposes model that distinguishes between rate-holds in period of tightening, easing and neutrality
New model prescribes strongly counter-cyclical medicine for financial shocks
Working paper from the Bank of Canada suggests counter-cyclical bank capital rules can help steady the ship in the wake of financial shocks, in tandem with monetary policy measures
ECB paper examines shifts in fiscal regimes
Study finds responsibility for stabilising debt levels has swung between monetary and fiscal authorities in UK, Germany and Italy; most clearly defined in UK
Accumulating reserves to guard against inflation is 'misplaced'
Researchers at Bofit institute find that using reserves as a ‘bulwark against goods price inflation' is a mistake; say best protection against costly reserves accumulation is flexible exchange rate