Debt Growth Rate, not Level, Predicts Slowdown
Last week, Bank of England's Deputy Governor for Monetary Policy Ben Broadbent gave an insightful speech about debt dynamics.
An important point Broadbent has...
Currency Zones through the last 50 years
The figure above is from a recent BIS working paper "A key currency view of global imbalances". It shows the currency geography as of four dates from the last days of Bretton Woods until now: 1968, 1985, 2001 and 2017.
IMF Growth Projections and Overfitting in Judgment-based Economic Forecasts
In a recent IMF working paper "Overfitting in Judgment-based Economic Forecasts: The Case of IMF Growth Projections", economist Klaus-Peter Hellwig examined IMF's World Economic Forecasts (WEO) and check if the forecast model suffer from the problem of overfitting.
Bank Equity and Banking Crises
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.
Nonbank Lending
In their recent working paper "Nonbank Lending", economists Sergey Chernenko, Isil Erel, and Robert Prilmeier provided an insightful overview of the sources and terms of private debt financing during the post-crisis period.
The Non‐Bank Credit Cycle
In a new working paper "The Non‐Bank Credit Cycle", researchers Esti Kemp, René van Stralen, Alexandros Vardoulakis, and Peter Wierts tried to look into the cyclical properties of non‐bank credit and its relevance for financial stability.
What comes after housing market bubble?
An investigation into the probability of a crash in house prices following a housing bubble
Why Does Credit Growth Crowd Out Real Economic Growth?
The faster the credit growth, the worse it is for real growth (output per worker). This is what Stephen G. Cecchetti and Enisse Kharroubi want to explain in their NBER working paper "Why Does Credit Growth Crowd Out Real Economic Growth?"
Media Sentiment and International Asset Prices
A new working paper from the IMF which tries to assess the impact of media sentiment on equity markets.
The sovereign-bank “doom loop”
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:
Interviews
DSGE model and the State of Macroeconomics | Q&A with Olivier Blanchard |
In this interview, Blanchard discussed his view on the role of DSGE model in modern Macroeconomics and policymaking. He also explained his decision to rewrite his macroeconomics textbooks after the Great Recession. His recent research on hysteresis was also discussed.