Macroeconomics
Powell: US economy still ‘a long way’ from meeting Fed goals
Fed chair predicts continued need for low interest rates and QE, as recovery remains “uneven and far from complete”
Green finance: new initiatives in China, Europe and Americas
Eurosystem adopts common investment principles; China pushes climate modelling; and more
Riksbank proposes larger transfer to Swedish Treasury
Central bank would provide Skr6.8 billion to the government in 2021
Paper finds little evidence of long-term scarring
Richmond Fed research finds short-term demand shocks rarely create hysteresis
Fed’s 2021 stress test includes major asset price shock
CCAR will evaluate 19 largest banks; scenario includes 55% fall in equity prices
Evidence of central bank research bias is ‘mixed’ – RBA paper
Results contrast with another recent study that found bias in research on QE
Central banks look to shockproof models in wake of Covid-19
The Covid-19 crisis caused many central bank models to break down. Economists at the St Louis Fed, Bank of Spain and ECB were quick to innovate and say they will continue testing new tools
Frequent recessions push up US unemployment rate – paper
Cleveland Fed research says two decades of growth would produce 3.6% unemployment
Reserve Bank of Australia launches A$100bn in new QE
Australian central bank surprises analysts with easing measure, despite more hopeful macroeconomic forecast
Monetary unions might benefit from taxing external debt – DNB paper
Policy would reduce adverse effects of shocks to risk premia on sovereign debt, researchers find
New macroeconomic framework needed for recovery – Ghana governor
Public debt levels have breached maximum thresholds and NPLs are likely to climb, Addison says
Higher economic uncertainty is harbinger of civil conflict – Bank of Spain research
Spain suffered rising levels of economic uncertainty leading up to 1936–39 civil war
BdF paper looks at fiscal responses to liquidity traps
Infrastructure spending is more robust to model specification changes than sales tax- paper
Macro-prudential policies cut liquidity trap risk – ECB paper
Fall in systematic risk boosts natural interest rate and reduces intensity of liquidity traps, paper finds
Paper lays groundwork for Canadian ‘Hank’ model
Author estimates “earnings process” as step towards heterogeneous agent modelling
Few central banks collaborate with private-sector researchers
Collaborations are common with academia, especially in advanced economies
Agent-based models remain rare among economics departments
Economics Benchmarks 2020 highlights the varied applications of different model types at central banks
Central banks tend to mix research with policy functions
Institutions deploy a wide range of different governance frameworks when it comes to research
Semi-structural models are the forecast weapon of choice
Flexible modelling approach comes out on top; around half of central banks include a financial sector
Eurozone’s ageing is lowering interest rates – BoI paper
Natural real interest rate is likely to reach its lowest point around 2030, researcher finds
Bank of Italy paper looks at flatter Phillips curve
Weaker collective bargaining has played key role in flattening relationship, researchers say
Weak banks could reverse effects of policy rate cuts – ECB paper
Countercyclical buffers play crucial role in preventing “reversal interest rate” events, researchers find
ECB paper looks at interest rate-growth differential
Several factors are likely to push differential up for some eurozone countries, say researchers
Sri Lanka central bank sees signs of ‘strong recovery’
Signs of bounce-back in the economy but recent surge in virus cases could cause problems