Spillovers
IMF authors build network model of trade fragility
Network theory helps authors unpick the effects of a supply shock on the “highly interconnected” global trade system
US affected by spillovers as well as causing them – Fed’s Fischer
Foreign developments can be a “substantial headwind” to US monetary policy, vice-chair says; hints at continued momentum towards a December rate hike
BIS paper adds evidence on macro-prudential spillovers
Tighter macro-prudential measures in one country tend to increase international lending, authors find
Public sector balance sheet poses risks for Dominican Republic – paper
IMF working paper analyses balance sheet developments in the South American nation’s economy; foreign currency exposure could amplify risks, authors say
ECB officials and Borio disagree on falling real rates
Vítor Constâncio and François Villeroy de Galhau emphasise importance of saving-investment mismatch, while Claudio Borio stresses financial cycle, but speakers find some points of agreement
BoE’s Forbes studies generation of ‘global tsunamis’
External MPC member asks why some global shocks have major consequences and others do not, seeking answers in countries’ financial linkages, common shocks and contagion
Chinese financial spillovers to Asia-Pacific on the rise – BIS paper
Working paper finds Chinese equity markets now have almost as much of an impact on Asia-Pacific as the US, though the effects differ in stressed and placid times
BoE paper finds fault with empirical methods for studying contagion
Review of spillover and contagion literature finds methods plagued by bias and heteroskedasticity, concluding no single technique is flawless, but some offer a partial solution
BIS paper digs into complex spillovers from US rates
Authors find short-run US rates have little impact on long-term rates elsewhere, but transmission at longer maturities and via bond markets is high
Sarb deputy sees tail risks from Brexit but expects storm to calm
Daniel Mminele sees tail risk coming from asset liquidation by UK corporates and investment funds, but if clear communication is given, the ‘storm is likely to calm’