EconReporter

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.

Since the Euro crisis, investors and policymakers are well aware of the so-called "doom loop" between the banking system and the sovereign. That is, a crisis originating in the banking system (sovereign) will weaken the sovereign (banking system), which in turn will worsen the banking (sovereign) crisis itself. In a recent ECB discussion Paper "Managing the sovereign-bank nexus", the 7 economists - Giovanni Dell’Ariccia, Caio Ferreira, Nigel Jenkinson, Luc Laeven, Alberto Martin, Camelia Minoiu, and Alexander Popov - coauthored the paper suggested that the banks and sovereigns are linked by three interacting channels:

The above figure shows the balance sheet of four major central banks from 2005 to 2015. Above the horizontal axis is the asset side...

An investigation into the probability of a crash in house prices following a housing bubble

Federal Reserve decided to cut rate by an supersized 0.5 percentage point. The decision finally ended the weeks-long market debate of whether the central bank would cut 25 or 50 basis points. One important thing, though, didn't reach the headline: The Fed has never been this "confused" about where the natural rate should be.

An explainer on how Hong Kong Linked Exchange Rate System works, what Aggregate Balance is, and how interest rate arbitrage help maintains Linked Exchange Rate System.

HKD tends to be on the strong side (closer to HKD 7.75 per USD) when the interest rate differential is positive (HIBOR > LIBOR).

Prof. Brad Delong's blogs, either "bradford-delong.com" or over at " Equitable Growth" , are definitely two of the most influential economics blogs in the...

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?

Inflation projections by Fed officials show that PCE inflation will not reach 2% by the end of 2025. Why the Fed expects to cut rate next year then?