|
Record ID
|
436
[ Page 25 of 68, No. 1 ]
|
|
Date
|
2013-12 |
|
Author
|
Andersen, Thomas Barnebeck, Malchow-Møller, Nikolaj, and Nordvig, Jens
|
|
Affiliation
|
Department of Business and Economics, Faculty of Business and Social Sciences
University of Southern Denmark, and Nomura Securities |
|
Title
|
Inflation targeting, flexible exchange rates, and macroeconomic performance since the Great Recession |
|
Summary /
Abstract
|
Has inflation targeting (IT) conferred benefits in terms of economic growth on countries that followed this particular monetary policy strategy during the crisis period 2007-12? Analyzing the sample of all OECD countries, we answer this question in the affirmative: Countries with an IT monetary regime with flexible exchange rates weathered the crisis much better than countries with other regimes. This includes in particular countries with fixed exchange rate regimes, but also countries with flexible exchange rates without IT. The result holds in the full sample; it holds when we exclude the so-called peripheral Eurozone countries (Greece, Italy, Ireland, Portugal, and Spain); and it holds when we exclude all Eurozone countries. It is, in other words, a robust empirical finding. We demonstrate that part of the explanation for this difference in growth performance is found in differences in export performance during the initial years of the crisis, which in turn is explained by real exchange rate depreciations. However, this cannot explain the entire difference in performance between countries with flexible and fixed exchange rates in the aftermath of the Great Recession. IT seems also to confer other benefits on the countries above and beyond the effect from currency depreciation. |
|
Keywords
|
Inflation targeting; flexible exchange rates; economic growth; OEDC; Great Recession |
|
URL
|
http://static.sdu.dk/mediafiles//D/9/3/%7BD93AC229-823C-46B7-B56D-B0B361C25AF7%7Ddpbe22_2013_.pdf
|
|
Record ID
|
435
[ Page 25 of 68, No. 2 ]
|
|
Date
|
2013-12 |
|
Author
|
Gavin, William T., Keen, Benjamin D., Richter, Alexander, and Throckmorton, Nathaniel
|
|
Affiliation
|
Federal Reserve Bank of St. Louis, University of Oklahoma, Auburn University, and Indiana University |
|
Title
|
The stimulative effect of forward guidance |
|
Summary /
Abstract
|
This article quantifies the stimulative effect of central bank forward guidance—the public announcement of the intended path for monetary policy in the future—when the nominal interest rate is stuck at its zero lower bound (ZLB). We use a global solution to a conventional nonlinear New Keynesian model to show how the forward guidance horizon impacts the stimulative effect. Forward guidance enters our model as news shocks to the monetary policy rule, which commits the central bank to a lower policy rate than its policy rule suggests. The success of forward guidance depends on whether households expect the economy to recover. When households expect a recovery, forward guidance about a future expansionary monetary policy shock lowers the expected nominal interest rate and increases current consumption. A longer forward guidance horizon strengthens this effect, but at a decreasing rate. |
|
Keywords
|
Monetary Policy; Forward Guidance; Zero Lower Bound; Global Solution Method |
|
URL
|
http://research.stlouisfed.org/wp/2013/2013-038.pdf
|
|
Record ID
|
434
[ Page 25 of 68, No. 3 ]
|
|
Date
|
2013-12 |
|
Author
|
Matthias Neuenkirch and Peter Tillmann
|
|
Affiliation
|
University of Trier and University of Giessen |
|
Title
|
Superstar Central Bankers |
|
Summary /
Abstract
|
The personalities of central bankers moved center stage during the recent financial crisis. Some central bankers even gained “superstar” status. In this paper, we evaluate the pivotal role of superstar central bankers by assessing the difference an outstanding governor makes to economic performance. We employ school grades given to central bankers by the financial press. A superstar central banker is one receiving the top grade. In a probit estimation we first relate the grades to measures of economic performance, institutional features, and personal characteristics. We then employ a nearest neighbor matching approach to identify the central bankers which are closest to those receiving the top grade and compare the economic performance across both groups. The results suggest that a superstar governor indeed matters: a topgraded central banker faces a significantly more favorable output-inflation trade-off than his peers. |
|
Keywords
|
Central banking, inflation expectations, monetary policy, nearest neighbor matching |
|
URL
|
http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/54-2013_neuenkirch.pdf
|
|
Record ID
|
432
[ Page 25 of 68, No. 5 ]
|
|
Date
|
2000 |
|
Author
|
Maurice Obstfeld, Kenneth Rogoff, and Ben Bernanke
|
|
Affiliation
|
University of California, Berkeley, Harvard University, Board of Governors, Federal Reserve System |
|
Title
|
The Six Major Puzzles in International Macroeconomics: Is there a Common Cause? |
|
Summary /
Abstract
|
The central claim in this paper is that by explicitly introducing costs of international trade (narrowly, transport costs but more broadly, tariffs, nontariff barriers and other trade costs), one can go far toward explaining a great number of the main empirical puzzles that international macroeconomists have struggled with over twenty-five years. Our approach elucidates J. McCallum's home bias in trade puzzle, the Feldstein-Horioka saving-investment puzzle, the French-Poterba equity home bias puzzle, and the Backus-Kehoe- Kydland consumption correlations puzzle. That one simple alteration to an otherwise canonical international macroeconomic model can help substantially to explain such a broad arrange of empirical puzzles, including some that previously seemed intractable, suggests a rich area for future research. We also address a variety of international pricing puzzles, including the purchasing power parity puzzle emphasized by Rogoff, and what we term the exchange-rate disconnect puzzle.' The latter category of riddles includes both the Meese-Rogoff exchange rate forecasting puzzle and the Baxter-Stockman neutrality of exchange rate regime puzzle. Here although many elements need to be added to our extremely simple model, we can still show that trade costs play an essential role. |
|
Keywords
|
International Macroeconomics, Major Puzzles, International Trade |
|
URL
|
http://scholar.harvard.edu/files/rogoff/files/nber2000.pdf
|
|
Record ID
|
431
[ Page 25 of 68, No. 6 ]
|
|
Date
|
2013-11 |
|
Author
|
Bianca De Paoli and Matthias Paustian
|
|
Affiliation
|
Federal Reserve Bank of New York |
|
Title
|
Coordinating monetary and macroprudential policies |
|
Summary /
Abstract
|
The financial crisis has prompted macroeconomists to think of new policy instruments that could help ensure financial stability. Policymakers are interested in understanding how these should be set in conjunction with monetary policy. We contribute to this debate by analyzing how monetary and macroprudential policy should be conducted to reduce the costs of macroeconomic fluctuations. We do so in a model in which such costs are driven by nominal rigidities and credit constraints. We find that, if faced with cost-push shocks, policy authorities should cooperate and commit to a given course of action. In a world in which monetary and macroprudential tools are set independently and under discretion, our findings suggest that assigning conservative mandates (á la Rogoff [1985]) and having one of the authorities act as a leader can mitigate coordination problems. At the same time, choosing monetary and macroprudential tools that work in a similar fashion can increase such problems. |
|
Keywords
|
Monetary policy ; Financial stability ; Macroeconomics ; Financial market regulatory reform |
|
URL
|
http://www.newyorkfed.org/research/staff_reports/sr653.pdf
|
|
Record ID
|
430
[ Page 25 of 68, No. 7 ]
|
|
Date
|
2013-11 |
|
Author
|
Silva Buston
|
|
Affiliation
|
Tilburg University |
|
Title
|
Essays on risk management and systematic risk |
|
Summary /
Abstract
|
Through the creation of the Financial Stability Board (FSB), G20 members have committed to regulate the financial sector across the globe in order to enhance the resilience of the system. Two important points in this agenda are the regulation of OTC derivatives, such as Credit Default Swaps (CDS) and the regulation of Systemically Important Financial Institutions (SIFIs). The first two chapters of this thesis relate to the first point. These papers study the effects of the use of CDS at banks on banks' behavior and stability. The last chapter of the thesis addresses the second point. This chapter discusses the proper assessment of systemic risk, and the characteristics and performance of systemically important banks based on this assessment. |
|
Keywords
|
Risk management, systemic risk, CDS, SIFIs, Financial Stability Board |
|
URL
|
http://arno.uvt.nl/show.cgi?fid=132205
|
|
Record ID
|
429
[ Page 25 of 68, No. 8 ]
|
|
Date
|
2013-10 |
|
Author
|
Peter Conti-Brown and Simon Johnson
|
|
Affiliation
|
Stanford Law School's Rock Center for Corporate Governance and Peterson Institute for International Economics |
|
Title
|
Governing the Federal Reserve System after the Dodd-Frank Act |
|
Summary /
Abstract
|
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act increased the powers of the Board of Governors of the Federal Reserve System along almost all dimensions pertaining to the supervision and operation of systemically important financial institutions. The authors argue that in light of these changes, the process of considering and choosing governors should also be changed. In nominating and confirming new governors, the president and Congress should make greater efforts to appoint only highly qualified people familiar with both regulatory and monetary matters. They should ensure that governors can work effectively with staff and engage on an equal basis with the chair. This is a pressing matter given that within the next 12 months there may be as many as four appointments to the Board, reflecting an unusually high degree of turnover at a critical moment for the development of regulatory policy, including rules on equity capital funding for banks, the ratio of debt-to-equity (leverage) they are permitted, the funding structure of bank holding companies, and whether and how much banks should be allowed to engage in commodity-related activities. |
|
Keywords
|
Federal Reserve System, Governance, Dodd-Frank Act, Board of Governors |
|
URL
|
http://www.piie.com/publications/pb/pb13-25.pdf
|
|
Record ID
|
428
[ Page 25 of 68, No. 9 ]
|
|
Date
|
2013-11 |
|
Author
|
Joseph E. Gagnon
|
|
Affiliation
|
Peterson Institute for International Economics |
|
Title
|
Stabilizing Properties of Flexible Exchange Rates: Evidence from the Global Financial Crisis |
|
Summary /
Abstract
|
Inflation targeting countries with flexible exchange rates performed better during the global financial crisis and its aftermath than countries with a fixed exchange rate. Countries that maintained a hard fixed exchange rate throughout the past six years performed somewhat better than those that abandoned it. But, abandoning a hard fix during a crisis is itself evidence of the economic costs of fixed rates. It is particularly telling that no inflation targeting country with a flexible exchange rate abandoned its regime during the crisis. Policymakers in many countries are averse to volatile exchange rates—they have a "fear of floating." Gagnon's results strongly suggest that flexible exchange rates enable countries to weather crises better than fixed rates and that the benefits of flexible rates are not limited to large countries. Policymakers should replace their fear of floating with a fear of fixing. |
|
Keywords
|
Flexible exchange rates, Inflation Targeting, Fear of floating, Fear of fixing |
|
URL
|
http://www.piie.com/publications/pb/pb13-28.pdf
|
|
Record ID
|
427
[ Page 25 of 68, No. 10 ]
|
|
Date
|
2013-10 |
|
Author
|
Emmanuel Carré, Jézabel Couppey-Soubeyran, Dominique Plihon, and Marc Pourroy
|
|
Affiliation
|
CEPN - Centre d'Economie de l'Université Paris Nord, CES - Centre d'économie de la Sorbonne, CEPN, and CES |
|
Title
|
Central Banking after the Crisis: Brave New World or Back to the Future? Replies to a questionnaire sent to central bankers and economists |
|
Summary /
Abstract
|
This paper provides a snapshot of the current state of central banking doctrine in the aftermath of the crisis, using data from a questionnaire produced in 2011 and sent to central bankers (from 13 countries plus the euro zone) and economists (31) for a report by the French Council of Economic Analysis to the Prime Minister. The results of our analysis of the replies to the questionnaire are twofold. First, we show that the financial crisis has led to some amendments of pre-crisis central banking. We highlight that respondents to the questionnaire agree on the general principle of a 'broader' view of central banking extended to financial stability. Nevertheless, central bankers and economists diverge or give inconsistent answers about the details of implementation of this 'broader' view. Therefore, the devil is once again in the details. We point out that because of central bankers' conservatism, a return to the status quo cannot be excluded. |
|
Keywords
|
Central banking; macroprudential policy; financial stability |
|
URL
|
http://halshs.archives-ouvertes.fr/docs/00/88/13/44/PDF/13073.pdf
|
|