Karl Walentin, Andreas Westermark, 02 April 2018

The Great Recession has spawned a vigorous debate regarding the potential benefits of stabilising the real economy. This issue takes on additional importance as the current economic situation in some countries, including the US, seem to imply an interesting monetary policy trade-off between stabilising the inflation and the unemployment level. This column summarises research indicating that stabilising the real economy raises the long-run level of output.

Cristina Conflitti, Riccardo Cristadoro, 21 March 2018

A recent strand of literature suggests that the decline of long-term inflation expectations observed between 2014 and 2016 was partly due to the fall in oil prices. Using euro area data, this column argues that this presumed relationship is false. Lower global demand prompted a positive correlation between oil prices and the real economy, while perceived constraints on monetary policy action resulted in a positive correlation between short- and long-term inflation expectations. These two phenomena explain the emergence of the apparent direct relationship.

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.

Kevin Daly, Loughlan O'Doherty, 05 March 2018

Recent years have seen emerging market economy inflation rates converge towards developed economy rates, as well as convergence between emerging markets. The sustained improved inflation performance in emerging markets has occurred even as unemployment in many of these economies has fallen to record lows. This column attributes the improved performance to two factors: increases in monetary policy credibility following the widespread introduction of inflation targeting, and a reduction in the frequency of emerging market currency crises, reflecting a secular improvement in their balance sheets.

Thomas Hasenzagl, Filippo Pellegrino, Lucrezia Reichlin, Giovanni Ricco, 15 January 2018

The ECB's Survey of Professional Forecasters supports the ECB’s view that inflation in the Eurozone will pick up and will be back within the central bank's target range in 2019.  This column disagrees.  Using a model that formalises the widely held view that inflation dynamics are a function of three components – long-term expectations, the Phillips curve, and oil price movement – it forecasts Eurozone inflation in 2019 at only 1.1%, a rate which is close to that implied by the bond markets.

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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”.

Holger Breinlich, Elsa Leromain, Dennis Novy, Thomas Sampson, 20 November 2017

On 23 June 2016, the UK voted to leave the EU. As soon as the result became clear, sterling depreciated sharply and, since the vote, UK inflation has dramatically increased. This column asks how much of the rise in inflation is due to the referendum. It finds that the referendum result pushed up UK inflation by 1.7 percentage points, which amounts to an annual (and potentially permanent) cost of £404 for the average British household.

Paul De Grauwe, Yuemei Ji, 01 November 2017

Dynamic stochastic general equilibrium models are still dominant in mainstream macroeconomics, but they are only able to explain business cycle fluctuations as the result of exogenous shocks. This column uses concepts from behavioural economics to develop macroeconomic models with endogenous business cycle fluctuations. Application of the models highlights how the trade-off between output and inflation is moderated by the flexibility of the economy. The models further help to explain the international transmission of business cycle fluctuations.

David Miles, Ugo Panizza, Ricardo Reis, Ángel Ubide, 25 October 2017

Occasionally, inflation is stubborn. For many years it was hard to bring under control, but in the last decade has been low and stable. The latest Geneva Report on the World Economy studies the latest bout of stubbornness, asking why inflation has remained in such a narrow range. It shows that a large number of diverse shocks have hit developed economies during the last decade, which have more or less cancelled each other out. One of these 'shocks' has been monetary policy, which was skilfully used in response to wider macroeconomic events. Central banks, in other words, combined good policies and good luck. Next time, however, we may not be so lucky.

Catherine Mann, 23 October 2017

For the first time since the financial crisis, no country is showing contraction. However, Catherine Mann points out that there is a need for more investment, trade and globalisation in order to have sustained growth. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Michael Bordo, Pierre Siklos, 17 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.

Toby Nangle, Anthony Yates, 12 October 2017

Among the many in quantitative easing programmes that central banks have engaged in to combat low inflation since the Global Crisis, the Bank of Japan’s programme stands out for its size and scope. This column explores whether the Bank’s programme of purchasing Japanese equities through exchange-traded funds has succeeded in its aim of lowering risk premia of asset prices. The Bank has timed the execution of the programme to coincide with episodes of market weakness, possibly with the aim of dampening price volatility. Over the course of the programme, however, Japanese stocks de-rated against global stocks.

Paul Krugman, 09 October 2017

How did academic macroeconomics evolve? In this video, Paul Krugman explains how macroeconomic models fail to completely explain the events of the last decade. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Leo de Haan, Jan Willem van den End, 29 September 2017

High asset prices can foreshadow tail risks in inflation. Based on data from 11 advanced economies since 1985, this column shows that high asset prices usually signal future high inflation episodes, but can occasionally signal low inflation or deflation instead. The transmission time of asset prices to inflation can be quite long. For central banks, this implies that the signalling content of asset prices for inflation is uncertain, both in timing and direction.

Klaus Adam, Henning Weber, 26 September 2017

The productivity of many firms evolves over time, which impacts the optimal inflation rate, that is, the rate of price increase with the least distortionary effect on relative goods prices. This column presents estimates for the US that suggest that, due to firm-level productivity changes, the optimal inflation rate has dropped from somewhat over 2% in the mid-1980s to a current level of roughly 1%.

Mojmir Hampl, Tomas Havranek, 12 September 2017

Seven out of every ten Europeans live in their own homes, yet Europe’s most important inflation measure excludes the costs associated with owner-occupied housing. This column argues that including the costs of home ownership would prove beneficial to the conduct of monetary and macroprudential policy. It would also bring the measure closer to what most people consider inflation to be.

Stefan Gerlach, 01 August 2017

With the Eurozone in recovery, at some stage the ECB will raise interest rates. This column examines the conditions that might lead to this happening. A statistical analysis suggests that the likelihood of an interest rate increase is currently about 7%, but a combination of stronger growth and higher price pressures could quickly raise this to about 30%. A return of the ECB to its pre-crisis behaviour would also lead to a dramatic rise in the likelihood of an interest rate increase.

Christiane Nickel, 28 July 2017

The past decade has seen a growing role for global slack in Phillips curve approaches, as opposed to the traditional focus on domestic slack. This column explores whether augmenting Phillips curves by measures of foreign slack can help to better explain past developments in underlying inflation. A majority of specifications, both with and without foreign slack, are found to yield very similar results. Even for periods when domestic slack differed substantially from foreign slack, like between 2012 and 2016, the effects seem to be rather small.

Charles Abuka, Ronnie Alinda, Camelia Minoiu, José-Luis Peydró, Andrea Presbitero, 29 June 2017

Existing studies suggest that the effects of monetary policy in developing countries on credit and the real economy are weak. This column challenges this view using rich loan-level credit register data from Uganda. It shows that monetary policy tightening significantly reduces credit supply – especially for banks with greater leverage and sovereign debt exposure – and identifies spillovers on inflation and economic activity. The effects are larger in more financially developed areas, highlighting the importance of financial development for policy effectiveness.

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