Financial crisis
Tucker: policymakers should focus on resilience and clarity
Central banks would gain legitimacy if they could better explain their models of systemic crises, and if politicians specified a particular risk tolerance, says former BoE deputy governor Paul Tucker
Fed’s Dudley discusses unwinding of balance sheet
Should reinvestment end “abruptly”, financial conditions would tighten, New York Fed president said; tapering “gradually and predictably” is the way to go, he adds
Financial constraints fuel price mark-ups, Italian paper finds
Researchers use data on Italian economy in 2010 to 2013
Fed authors construct ‘financial stability sentiment’ index
Index derives sentiment from central bank financial stability reports, finding a drop in sentiment tends to precede a “significant deterioration” of financial indicators
RBA’s Bullock says central banks are ready to ‘take action’
Old school of thought regarding asset bubbles abandoned following financial crisis; macro-prudential tools are helping policymakers “clean up”
Deregulation could lead to further crisis – Lautenschläger
ECB supervisor worried by politicians’ calls for regulatory loosening
Central banks’ liquidity injections may amplify bank runs, paper argues
ESRB paper looks at 2008 US crisis using simple model of bank runs
BIS authors spot structural break in bank financing
Research identifies turning point in how banks fund themselves around 2008, with greater reliance on branches and subsidiaries
Scrap micro-foundations to repair macroeconomics – Steve Keen
Professor says economy should be viewed as a dynamic system with credit playing a crucial role, arguing we should ditch models such as DSGE
BoE paper isolates loan supply impact of credit crunch
“Rich, tailor-made data set” informs study of how pre-crisis bank lending characteristics may have impacted post-crisis credit supply
MAS director calls for firms to promote good governance
As regulations shift towards strengthening culture at firms, there is only so much central banks can do, MAS’ Ngiap says; firms must put customers before profit
Lifetime achievement award: Donald Kohn
Donald Kohn’s objectivity, intelligence, humour, tireless energy and iron determination to get the job done epitomise the role of a dedicated public servant. He serves as an inspiration to others
BoE paper raises risk of ‘bubbly growth traps’
Asset bubbles can direct resources to low-productivity sectors, which could explain the long hangover from recent crises, author says
Economic shocks more likely to spread within EU – new research
Researchers use new model to measure propagation of regional shocks in Europe
BoE unlikely to predict next financial crisis, says MPC member
BoE MPC members grilled by MPs in forecasting models and past errors; Vlieghe says current models are just not good enough
BoE paper calls for international standards on 'broader co-ordination'
Credit growth in the rest of the world has a large positive effect on the probability of domestic banking crises
Ingves sees cross-border resolution lessons from Swedish crisis
Crisis in the early 1990s prompted Swedish authorities to take early action on cross-border resolution, the Riksbank governor says
FSB: ‘no immediate case’ for aligning rehypothecation rules
No pressing need to harmonise rules, but better monitoring of global collateral reuse will give regulators a clearer understanding, FSB says
Book notes: The International Monetary Fund: Distinguishing Reality from Rhetoric, by Graham Bird and Dane Rowlands
The book brings valuable rigour to bear in assessing the work of the IMF, but suffers from a reliance on ageing data in many places, says Jacek Klich
Riksbank early warning indicator signals high risks
New measure of financial fragility performs better than credit gap method, economists say; current readings suggest risks are on a par with 2008
BIS paper finds Fed’s QE had little discernible impact on real economy
Results are still preliminary, authors say, but “cast some doubt” on the effectiveness of US quantitative easing
Book notes: The Man Who Knew: The Life & Times of Alan Greenspan, by Sebastian Mallaby
An extensive account of Greenspan's life and achievements, but would have benefited from a closer analysis of his relationships with comrades at the Fed
Haldane hopeful for ‘rebirth’ of economics
BoE chief economist believes crisis for the profession could lead to a break with past thinking; offers solutions to productivity problems
BoE paper experiments with measuring vulnerabilities
The study finds the US had highest levels of vulnerability in the run-up to the 2008 financial crisis, with Asia and Europe appearing “robust”; the picture has now reversed, authors say