Franziska Ohnsorge, Shu Yu, 16 May 2017

Since the Global Crisis, private credit has risen sharply in several emerging market and developing economies as well as advanced economies. This column examines the role of investment alongside these credit booms, and how output growth has been affected. These booms have been unusually ‘investment-less’ in comparison to previous episodes, which were accompanied by investment surges. The absence of investment surges during credit booms is accompanied by lower growth, especially once the credit boom unwinds.

Mélika Ben Salem, Bárbara Castelletti, 15 May 2017

In the aftermath of the Global Crisis, sovereign yield differentials have increasingly widened among European developed countries. Financial markets seem to discriminate among peripheral economies requiring a higher risk premium than is justified by fiscal factors only. This column discusses the causes of this phenomenon. In peripheral countries, it is not due simply to the lack of fiscal discipline, but to a combination of both internal and external imbalances.

Georg Graetz, Guy Michaels, 13 May 2017

Recoveries from recessions in the US used to involve rapid job generation, but job growth has failed to match GDP recovery after recent US recessions. This column examines the role of technology in this and asks whether jobless recoveries are a wider problem outside of the US. In the US, industries that are more prone to technological change experienced slower job growth during recent recoveries, but it appears unlikely that modern technologies are causing jobless recoveries outside of the US. This poses a puzzle as to the nature of recent jobless US recoveries. 

Henrike Michaelis, Volker Wieland, 12 May 2017

In recent speeches, Federal Reserve Chair Janet Yellen and ECB President Mario Draghi have attributed the Fed’s and the ECB’s low interest rate environment to low equilibrium rates rather than to Fed or ECB policies. This column argues that estimates of these equilibrium rates are extremely uncertain and sensitive to technical assumptions, and thus should not be used as key determinants of the policy stance. But if used nevertheless, a consistent application together with associated output estimates call for a tightening of the policy stance. 

Keiichiro Kobayashi, 02 May 2017

There is concern about the persistent slowdown of economic growth in the aftermath of financial crises. This column presents a framework which shows that excessive debt accumulated by firms and households during a crisis can cause persistent stagnation. Relief from excessive debt has a direct impact on economic growth, whereas unconventional monetary and fiscal policies cannot directly solve the fundamental debt problem.

Robert Kollmann, Beatrice Pataracchia, Rafal Raciborski, Marco Ratto, Werner Roeger, Lukas Vogel, 27 April 2017

The Global Crisis led to a sharp contraction and long-lasting slump in both Eurozone and US real activity, but the post-crisis adjustment in the Eurozone and the US shows striking differences. This column argues that financial shocks were key determinants of the 2008-09 Great Recession, for both the Eurozone and the US. The post-2009 slump in the Eurozone mainly reflects a combination of adverse aggregate demand and supply shocks, in particular lower productivity growth, and persistent adverse shocks to capital investment linked to the poor health of the Eurozone financial system. Mono-causal explanations of the persistent slump are thus insufficient. Adverse financial shocks were less persistent for the US.

Jorge Abad, Marco D'Errico, Neill Killeen, Vera Luz, Tuomas Peltonen, Richard Portes, Teresa Urbano, 25 April 2017

The Global Crisis highlighted how linkages between banks and shadow banking entities can lead to the amplification of shocks across borders and sectors, prompting policymakers to seek to improve the monitoring framework for assessing the interconnectedness of the shadow banking system. This column documents the cross-sector and cross-border exposures of EU banks to globally domiciled shadow banking entities. Among the findings are that 60% of these exposures are to shadow banking entities domiciled outside the EU and hence outside its supervisory powers,  and that approximately 65% of the exposures are to non-money market fund investment funds, finance companies, and securitisation entities. 

Thorsten Beck, 24 April 2017

Nine years after the onset of the Global Crisis, the problem of non-performing assets is still acute in the Eurozone. This column takes stock of the different proposals to deal with the issue. It argues that a Eurozone-level asset management company can resolve bank fragility and spur economic recovery, but warns that lack of political will and legal barriers can impede the creation of such an agency. 

Dan Andrews, Chiara Criscuolo, Peter Gal, 27 March 2017

Even before the Global Crisis, productivity growth had slowed in many OECD countries. This column argues that the global slowdown at the aggregate level masks a deterioration in both productivity growth within firms and a process of creative destruction. Using a cross-country firm-level database for 24 countries, the authors reveal an increasing productivity gap between the global frontier and laggard firms, fewer exits by weak firms, and a decline in entry. These problems have been compounded by the failure of policy to encourage the diffusion of best practices in OECD countries.

Emine Boz, Luis Cubeddu, Maurice Obstfeld, 09 March 2017

After intensifying through the 2000s until the Global Crisis, the ‘uphill’ flow of capital from poor to rich countries decelerated and has recently reversed. This column documents that saving shifts by China, commodity-exporting emerging and developing economies, and advanced economies played key roles in accounting for the apparently puzzling pattern in the pre-crisis decade. Ongoing policy uncertainties in advanced economies mean large and persistent downhill flows of capital are unlikely in the near term. Going forward, capital flows to emerging and developing economies will need to be supported by policies that enhance the benefits of inflows, temper capital flow volatility, and improve the resilience and depth of domestic financial markets.

Jakob de Haan, Sylvester Eijffinger, 27 January 2017

It has been observed that since the start of the Global Crisis, central banks in most advanced economies have become more powerful and political, but they have not become more accountable. This column discusses why central bank independence matters, and looks at whether it has changed since the crisis. 

Morten Ravn, Vincent Sterk, 11 January 2017

Recent economic events cast doubt on the standard macroeconomic models. This column looks at new economic models built on the idea that inequality and income risk matter for the business cycle and long-run outcomes. While still in their infancy, these models show promise in addressing the concerns about the old New Keynesian models, and in bringing about a shift in the way that macroeconomists think about aggregate fluctuations and stabilisation policy. 

Kristin Forbes, Dennis Reinhardt, Tomasz Wieladek, 23 December 2016

Globalisation is in retreat, but while the slowdown in trade is widely recognised, what is more striking is the collapse of global capital flows. This column shows how banking deglobalisation is a substantial contributor to the sharp slowdown in global capital flows. It finds that certain types of unconventional monetary policy, and their interactions with regulatory policy, can have important global spillovers. Policies designed to support domestic lending may have had the unintended consequence of amplifying the impact of microprudential capital requirements on external lending.

Elisa Gamberoni, Claire Giordano, Paloma Lopez-Garcia, 13 December 2016

An efficient allocation of inputs across firms is a necessary condition to boost TFP growth. This column presents evidence that in large Eurozone economies, capital misallocation trended upwards in the period 2002-2012 while labour misallocation dynamics were flatter. Uncertainty and credit market frictions were strongly associated with the observed developments in capital misallocation, whereas the overall deregulation in the product and labour markets contributed to dampening input misallocation dynamics. 

Xavier Vives, 06 December 2016

As with previous systemic crises, the 2007-2009 crisis has created regulatory reform, but is it adequate? This column argues that prudential regulation should consider interactions between conduct – capital, liquidity, disclosure requirements, macroprudential ratios – and structural instruments, and also coordinate with competition policy. Though recent reforms are a welcome response to the latest crisis, we do not know how effective they will be in future.

Michael Bordo, Arunima Sinha, 20 November 2016

In the wake of the Great Recession, the Federal Reserve took unprecedented measures to stem economic decline. This column uses the Fed’s open-market operations in 1932, another period of short-term rates near the zero lower bound, as a comparison for the QE1 operation of 2008-09. Although the 1932 policy boosted output and inflation, if the Fed had announced the operation in advance and carried it out for a full year, the Great Depression could have been attenuated considerably earlier.

Domenico Lombardi, Pierre Siklos, 07 November 2016

After the 2008 Global Crisis, there has been progress towards a system-wide regulatory architecture that includes a national macroprudential authority. This column describes a ‘capacity indicator’ that measures the state of macroprudential policies worldwide, including the features policymakers believe constitute a successful macroprudential policy regime. Eventually this index may be used to establish whether these macroprudential policy innovations have been successful.

Bruce Kasman, Joseph Lupton, 03 November 2016

Over the past two years, a significant disinflationary impulse has dampened nominal activity around the world. As this disinflationary impulse fades, however, both nominal and real growth should normalise. Indeed, as this column highlights, the latest signs show inflation and inflation expectations rising, profits stabilising, and capital expenditure inching up.

Peter Cziraki, Christian Laux, Gyöngyi Lóránth, 26 October 2016

Banks' payout decisions at the beginning of the financial crisis of 2007-2009 were particularly controversial as the crisis eroded the capital of many banks. Concerns were raised that banks may have engaged in wealth transfer to shareholders, or that they may have been reluctant to reduce dividends to avoid negative signalling. This column examines these arguments using a large dataset on US bank holding companies. Cross-sectional tests do not provide clear-cut evidence of active wealth transfer. Similarly, the evidence on signalling is mixed.

Antonio Fatás, Lawrence Summers, 12 October 2016

Conventional wisdom on supply and demand suggests that demand shocks are cyclical or transitory, and that only technology shocks are responsible for trend changes. This column argues that cyclical events can have permanent effects on demand, and therefore GDP. It is time for policymakers to start considering the possibility of hysteresis seriously.

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