Research
Riksbank paper looks at scrapping inflation target in favour of nominal GDP
Working paper concludes the inflation target should not be dropped, but only outperforms nominal GDP targeting when forward guidance is given
ECB’s LTROs had ‘favourable effect’ on sovereign yields
Dutch working paper evaluates the impact of the ECB’s unconventional monetary policy; says LTRO had beneficial short-term effect on government borrowing in most distressed eurozone countries
Canadian paper proposes new DSGE model for analysing credit shocks
Working paper proposes new model that accounts for the effects of defaults on both households and banks; finds the probability of a company defaulting rises with its leverage ratio
ECB paper finds cost of macro-prudential policies may outweigh benefits
Working paper finds macro-prudential policies can be effective in deflating asset bubbles, but warns the cost of doing so may be higher than the benefit
Fed research models optimal monetary and fiscal policy under uncertainty
Discussion paper seeks to improve on previous models by introducing uncertainty; finds it is optimal for the government to spend more at the zero lower bound under uncertainty
Polish paper compares MP committees' efficiency
Paper finds MPCs became less efficient following the crisis, though the ECB and BoE have been quick to recover; says academics and central bankers make most efficient members
Fed researchers find little QE impact on emerging market capital flows
Discussion paper finds Fed’s quantitative easing has not had a statistically significant impact on net capital flows to emerging markets, although behaviour changed post-crisis
Bundesbank research studies how weak resolution rules impact growth
Discussion paper employs ‘catharsis indicator’ to show that stronger resolution regimes reward good firms and help to allocate credit effectively, boosting growth
IMF paper explores link between low interest rates and bank risk-taking
Working paper finds banks take more risks in low short-term interest rate environment; more so if they are well capitalised
RBA researchers test new BVAR-DSGE method on Australia
New modelling technique aims to overcome small, open economy issues in previous attempts to combine Bayesian VAR and DSGE methods
IMF paper says direct eurozone spillovers limited to US and UK banks
Working paper analyses effects of eurozone crisis at bank level; finds direct impact limited to UK and US though other regions could be susceptible to knock-on effects
RBA research analyses factors driving US credit crunch
Working paper finds shutdown of the securitisation market explains a ‘significant share’ of the credit tightening in the US in the run-up to the global financial crisis
Price stability ‘pivotal’ in shaping exchange rate pressures
Bank of Finland discussion paper analyses pressure on exchange rates during financial crisis; says countries that experienced high inflation beforehand were hardest hit
Colombian paper draws policy lessons from credit- and business-cycle links
Researchers find lagged response of growth to the credit cycle, making it challenging for policy-makers to target both financial and real variables with a single instrument
Paper examines roster of RMB bilateral swap partners
BOFIT researchers find the list of countries signing a swap agreement with China is determined by a range of factors - and suggest the agreements are not used as a ‘soft power' political tool
Policy-maker prudence can't help early warning efficacy, IMF paper finds
Working paper finds parametric early-warning systems are preferable to non-parametric; greater prudence lets policy-makers call more crisis episodes correctly, but at the cost of more false alarms
French paper evaluates forecasting strategies
Working paper says a predictive model that combines information sets is capable of outperforming alternative models that combine forecasts; tests models on French GDP data
Kansas City Fed article finds markets anticipated QE announcements
Article in the Federal Reserve Bank of Kansas City’s latest economic review says that markets foreshadowed changes in asset purchase programme; may have affected long-term interest rates
New IMF paper finds fiscal consolidation boosts poor country growth in medium term
New VAR methodology leads researchers to conclude that fiscal consolidation hurts low-income countries less, and for a shorter period
IMF paper proposes ‘more ambitious’ benchmark design
Working paper calls current benchmark designs ‘a legacy from history’; proposes own design to better represent actual wholesale funding costs
IMF paper dissects 'remarkably stable’ US inflation
Working paper examines factors behind favourable inflation performance in the US following the Great Recession, identifying three main causes
Bank of Mexico paper backs credit multiplier as amplification mechanism in DSGE
Working paper finds that credit multipliers do produce the amplification effects expected of them in a DSGE model and are not failing as some suggest
Colombian paper trumpets transparent forex intervention
Research says ‘pre-announced and transparent’ interventions had a greater impact on the Colombian exchange rate than more discretionary or ‘dirty’ purchases
IMF researcher argues bank competition policy should take aim at TBTF
Developments in advanced economy bank sectors over the last 20 years mean competition policy should concentrate less on increasing competition and more on reducing too-big-to-fail