Global economy

José L. Fillat, Stefania Garetto, Arthur V. Smith, 30 November 2018

How relevant are global banks in the transmission of shocks across countries? This column discusses the effects that the presence of foreign banking institutions has on the transmission of shocks during crises. Using a model that microfounds a bank’s decision on whether and how to expand into foreign markets, it quantifies the extent of shock transmission and examines the effects of counterfactual regulatory and monetary policies across borders. 

Hites Ahir, Nicholas Bloom, Davide Furceri, 29 November 2018

The global economy is growing, but so is uncertainty. This column presents a new quarterly index of uncertainty for 143 countries. The World Uncertainty Index reveals how uncertainty in the world has evolved over time, whether it is synchronised across countries, and how it compares across income groups and political regimes.

Laurence Kotlikoff, 28 November 2018

The general consensus on what caused the Great Recession can be summed up as “bad banks full of bad bankers did bad things”. This column argues, however, that this narrative doesn’t fit the facts. And worse, it diverts attention from the real problem, which was regular use of a bad banking system – a banking system built to fail.

Daniel Calvo, Juan Carlos Crisanto, Stefan Hohl, 23 November 2018

A well designed financial supervisory architecture is essential for the effective functioning of any financial system. Using a survey of 82 jurisdictions, this column describes the state of financial supervisory models around the world and highlights the key institutional changes after the Global Crisis. It finds that the prevailing financial supervisory model continues to be sectoral, but that there have been incremental but important changes within existing models. Central banks have acquired more financial oversight responsibilities after the Global Crisis, and many jurisdictions have enhanced or are in the process of enhancing their consumer/investor protection supervision.

Yasuyuki Todo, Yuzuka Kashiwagi, Petr Matous, 19 November 2018

Global producers, service providers, and international financial institutions are becoming increasingly intertwined through expanding supply chains. This column uses new firm-level data on the impact of Hurricane Sandy in 2012 to examine how economic shocks are propagated by global supply chains. While the hurricane’s negative shock appeared to propagate among firms within the US, the shock does not seem to have spread internationally. The findings suggest that access to global opportunities and to alternative partners can be a source of resilience against disaster shocks for internationalised firms.

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