Claudia Buch, Matthieu Bussière, Linda Goldberg, Robert Hills, 20 April 2018

The channels through which one country’s monetary policy affects the international economy are still not that well understood. This column presents findings from latest project of the International Banking Research Network, which reveal that monetary policy spillover effects via bank lending are significant across countries in both conventional and unconventional periods. While the results provide some support to the bank lending and portfolio channels traditionally studied in the literature, they also suggest that other bank-level frictions matter.


SUERF / WU / OeNB Conference
Date: Friday, 4 May 2018
Venue: Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1090 Vienna

Yasin Mimir, Enes Sunel, 03 April 2018

The Global Crisis originated in developed economies but was also a large shock to emerging market economies. Based on this event, this column argues that emerging market central banks should take into account domestic and external financial variables such as bank credit, asset prices, credit spreads, the US interest rate and the real exchange rate, not just effects on inflation and real economic activity. A stronger anti-inflationary stance is needed when monetary policy aims to maintain financial stability.

Charles Bean, 15 March 2018

Interest rates are near zero and inflation is even lower. Professor Sir Charles Bean, former Deputy Governor at the Bank of England and President of the Royal Economic Society, talks to Mark Thoma about the importance of clear communication in such uncertain times. The interview was recorded at the Royal Economic Society annual conference at The University of Manchester in Spring 2015 and produced by Econ Films.

David Cobham, 16 March 2018

Monetary policy characterisations across countries rely on the availability of data, but while exchange rate classifications are well developed, the same is not true for domestic targets. This column introduces a new classification of the monetary policy frameworks of different advanced and emerging countries, including domestic and external targets. One trend revealed by the classification is the movement over time away from exchange rate targets and loosely structured discretion towards inflation targeting.

Gianluca Benigno, Luca Fornaro, 15 March 2018

Existing research offers little guidance to policymakers who want to understand the interactions between economic fluctuations, growth, and stabilisation policies. This column introduces a Keynesian growth framework that provides a theory of long-run growth, built on a Keynesian approach to economic fluctuations. In the model, pessimistic expectations about future growth can give rise to stagnation traps. It suggests that monetary policy during a stagnation trap is hindered by credibility issues.

Thomas Lustenberger, Enzo Rossi, 04 March 2018

Most central banks communicate more openly with the markets than they did 20 years ago. The column argues that more speeches, more forward guidance, and more transparency has often worsened the accuracy of private-sector forecasts. Too much communication may be the problem, creating a cacophony of policy voices.

K. Kıvanç Karaman, Sevket Pamuk, Seçil Yıldırım-Karaman, 24 February 2018

There is a notable lack of long-run analyses of monetary systems and their stability. This column addresses this gap by looking at the monetary systems of major European states between 1300 and 1914. The evidence collected suggests that, despite many switches between standards and systems, fiscal capacity and political regimes ultimately shaped patterns of monetary stability. Theories of monetary stability that rely on the mechanics of monetary systems perform poorly when such a long-run perspective is taken.

Gauti Eggertsson, Ragnar Juelsrud, Ella Getz Wold, 31 January 2018

Economists disagree on the macroeconomic role of negative interest rates. This column describes how, due to an apparent zero lower bound on deposit rates, negative policy rates have so far had very limited impact on the deposit rates faced by households and firms, and this lower bound on the deposit rate seems to be causing a decline in pass-through to lending rates as well. Negative interest rates thus appear ineffective in stimulating aggregate demand.


PLEASE USE THE BELOW LINK FOR A LIST OF TOPICS AND SUBMISSION INFORMATION - contributions are being sought for 20 contributed sessions on a wide range of policy-relevant research topics.
CEBRA’s 2018 Annual Meeting is co-organized by the Research Center SAFE (Sustainable Architecture for Finance in Europe) at Goethe University Frankfurt. The scientific committee is chaired by Ester Faia and Mirko Wiederholt.
Jens Weidmann, Governor of the Deutsche Bundesbank and Chairman of the Board of the Bank for International Settlements will deliver the keynote speech of the meeting.
The International Monetary Fund will organize a high-level panel on the topic “Financial Conditions, Financial Vulnerability, and Stabilization Policies”
The Deutsche Bundesbank and the Financial Stability Board will organize a high-level panel on the topic “Post-implementation Evaluations of the G20 Financial Regulatory Reforms”.

Andrew Powell, 25 November 2017

The recent interest rate rise in the UK occurred despite negative economic news. This is not what conventional inflation-targeting policy would imply. This column argues that recent Latin American experience suggests the theory underlying inflation targeting may need to be reconsidered. Specifically, for small open economies, the role of the exchange rate and inflation expectations should be considered when deciding how to react. 

Maritta Paloviita, Markus Haavio, Pirkka Jalasjoki, Juha Kilponen, 24 October 2017

Price stability is an explicit target for the ECB, but the definition of the 2% target is less clear in its monetary policy stance over time. This column presents two alternative interpretations of the ECB’s definition of price stability. First, the ECB dislikes inflation rates above 2% more than rates below 2%. Second, the ECB’s policy responses to past inflation gaps are symmetric around a target of 1.6% to 1.7%. Out-of-sample predictions of the reaction function based on the second interpretation track well an estimated shadow interest rate during the zero lower bound period.

Michael Bordo, Pierre Siklos, 18 October 2017

The role of central banks in monetary policy and financial stability has changed radically over time. This examines the similarities and idiosyncrasies of ten central banks, and also considers how inflation might have looked had the central banks been around earlier, or had they adopted different strategies. While important differences between the narrative and statistical analyses of crises indicate that neither is sufficient on its own, small open economies appear to do comparatively well across the various crisis conditions, and inflation is almost always higher in the absence of an inflation target.

Michael Bordo, Andrew Levin, 23 September 2017

Central banks across the world are considering sovereign digital currencies. This column argues that these currencies could transform all aspects of the monetary system and facilitate the systematic and transparent conduct of monetary policy. In particular, a central bank digital currency can serve as a practically costless medium of exchange, a secure store of value, and a stable unit of account. To achieve this, the currency would be account based and interest bearing, and the monetary policy framework would target true price stability.

Yusuf Soner Baskaya, Julian di Giovanni, Sebnem Kalemli-Ozcan, Mehmet Fatih Ulu, 01 September 2017

Most models assume capital flows are endogenous to the business cycle, and that inflows increase during an economy’s ‘boom’ periods. This column shows that the international no-arbitrage condition in fact does not hold, and that capital flows are pushed into an economy due to high global risk appetite. Controlling for domestic monetary policy responses to capital flows and changes in the exchange rate, exogenous capital inflows lower real borrowing costs and fuel credit expansion.

James Bullard, 30 August 2017

Since the financial crisis, we have seen very low interest rates in advanced economies. In this video, James Bullard discusses the concept of prices as neutral objects. This video was recorded in July 2017 at a macroeconomics conference organised by the Bank of England.

Jesús Fernández-Villaverde, 03 August 2017

If the share of payments made by cryptocurrencies increases, government-issued money will face market competition from private issuers. The column argues that, even if this system could maintain price stability in an economy, the market would not provide the socially optimum amount of money. A government could still, however, maximise social welfare using monetary policy in response to peg the real value of money. The threat of competition from private monies may therefore impose welcome market discipline on any government that issues currency.

Asli Demirgüç-Kunt, Bálint Horváth, Harry Huizinga, 06 July 2017

Monetary policies pursued by lending countries may have negative spillovers for financial stability in emerging markets, because monetary policy is transmitted through its effect on the aggregate supply of cross-border loans. This column uses data on the international syndicated loan market to argue that foreign bank ownership in a borrower country reduces the negative impact of lender-country monetary policy on cross-border syndicated loan supply. This suggests that countries could stabilise their cross-border credit supply by reducing restrictions on foreign bank entry into local markets.

Athanasios Orphanides, 06 June 2017

Results of actions taken by central banks across advanced economies in response to the Global Crisis have been uneven in allaying fears regarding debt sustainability. This column compares the cases of Italy and Japan to that of Germany to examine whether monetary policy actions since the crisis have become a more important driver of debt dynamics than fiscal policy actions. In contrast to Japan, where in the past few years decisive monetary policy actions have allayed fiscal concerns, in Italy monetary policy decisions appear to have contributed to debt sustainability concerns.  

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. 



CEPR Policy Research