EconReporter

In a recent research, four European Central Bank economists found that negative interest rate policy in the eurozone can encourage banks to increase lending and encourage cooperations to increase investments. That is, contrary to what macroeconomics models usually predict, interest rate policy can still has stimulative effect even the zero lower bound is reached.

Countries with swap line arrangement with Federal Reserve, be it the standing ones or temporary, saw smaller increases in spread during the initial pandemic stress period.

Planet Money Book is an excellent introduction to economics and finance and reminded me why it is good to have Planet Money in our life.

Hong Kong Monetary Authority, the de facto central bank of Hong Kong, announced on April 22 that it will utilize the Fed's FIMA Repo facility to borrow USD 10 billion of cash.

Hysteresis is referred to the hypothesis that recessions may have permanent effects on the level of output relative to trend.

In a recent study "Bank Equity and Banking Crises" by Matthew Baron (of Cornell University), Emil Verner (MIT Sloan), and Wei Xiong (Princeton University), the three economists developed a comprehensive database of bank equity prices and banking crises with a full-sample of 46 countries from 1870-2016. They try to understand the dynamic between bank equity decline and banking crises.

A series of papers by Stefan Avdjiev, Bilyana Bogdanova, Patrick Bolton, Wei Jiang, and Anastasia Kartasheva on this topic is highly recommended.

What if I tell you, behind the boring news headline, there is actually a wonkish story about how the Hong Kong central bank took advantage of the monetary easing by the Fed in the last 12 year and created a new set of policy options that it can now use to actively mange the inflows created by the new round Fed easing under the Great Lockdown.

The Federal Reserve is expected to cut its benchmark interest rate by 25 basis points this week. This has been the baseline market assumption since Chairman Jerome Powell's speech at Jackson Hole, in which he proclaimed, “the shifting balance of risks may warrant adjusting our policy stance." The question is, how many dissenting votes will Powell face in this meeting?

Ben Bernanke has a new blog post on Brookings. The focus of the post is to explain "the large difference between the reactions of the Fed and the markets to the change in fiscal prospects since the election"