Central banks

IFDP Paper: Multi-Plant Firms, Variable Capacity Utilization, and the Aggregate Hours Elasticity

07/08/2026 Federal Reserve Central banks

Domenico Ferraro, Giuseppe Fiori, and Damian PierriWe develop a business cycle model with perfectly competitive product and labor markets in which production requires a minimum labor input, generating endogenous capacity utilization. The aggregate production function is kinked, featuring constant returns to scale below capacity—typically in recessions—and decreasing returns at capacity in expansions.

Statistical Notice 2026/07 - Bank of England Levy: Notification Document Levy Year 2026/27

07/08/2026 Bank of England Central banks

Statistical Notices update the definitions and guidance contained in the Banking Statistics Yellow Folder

How do economies with open labour markets work? The role of temporary migration in the European Union

07/08/2026 European Central Bank Central banks

This paper studies how temporary migration affects macroeconomic fluctuations and the conduct of stabilisation policies using a two-country DSGE model with search-and-matching frictions and endogenous cross-border labour mobility. The analysis shows that migration responds endogenously to both labour market conditions and exchange rate movements, making it an important channel of cross-country adjustment. Labour mobility alters the transmission of shocks in three main ways.

FEDS Paper: Capturing Heterogeneity: Machine Learning Approaches to Implied Volatility Forecasting

07/07/2026 Federal Reserve Central banks

Hyung Joo Kim and Dong Hwan OhDespite documented heterogeneity in volatility dynamics across the option surface, standard implied volatility forecasting models apply homogeneous parameters throughout. We introduce a machine-learning framework that uses regression trees to partition the surface along both moneyness and maturity dimensions, identifying data-driven regions where distinct forecasting models perform best.

Financial Policy Committee Record – July 2026

07/07/2026 Bank of England Central banks

Our Financial Policy Committee (FPC) meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.

Barriers to a European Banking Union

07/07/2026 European Central Bank Central banks

We quantify barriers to cross-border bank lending to firms within the euro area and their consequences for credit allocation and output. Using loan-level data from the European credit registry (AnaCredit) and group structures (RIAD),we estimate barriers to relationship formation, loan pricing, and banks’ branching decisions at the country-pair level. We find that barriers to cross-border relationships between banks and firms and cross-border bank entry are large while wedges on interest rates and loan quantities are comparatively small.

Measuring geoeconomic tension: a large-language-model approach for the euro area

07/07/2026 European Central Bank Central banks

We construct an index of geopolitical and geoeconomic tension for the euro area using Large-Language Models (LLMs) that prompt a large dataset of European, local-language newspaper articles. The resulting LLM Geoeconomic and Geopolitical Tension (LGPT) index and its subindices seek to provide an accurate narrative of tensions and their sources over the past quarter century. The multilingual LLM approach allows for a separation between geopolitical and geoeconomic tensions and for granularity in the identification of the source of such tensions including trade, energy and finance.

Bank of England appoints Rhys Phillips as the new Chief Cashier

07/06/2026 Bank of England Central banks

The Governor of the Bank of England, Andrew Bailey, has announced that Rhys Phillips will be the next Chief Cashier and Director of Notes. He will take up the role on 19 October 2026.

Monetary policy transmission and non-bank financial intermediation

07/06/2026 European Central Bank Central banks

The growing importance of non‑bank financial intermediaries (NBFIs) also has important implications for the transmission of monetary policy in the euro area. It alters the composition of credit supply and strengthens the role of market‑based finance for the corporate sector. In the aggregate, NBFIs tend to amplify the transmission of monetary policy within the financial sector. In particular, intermediaries with uninsured short‑term funding amplify monetary transmission to credit.

The propagation of shocks across the production network and implications for monetary policy

07/06/2026 European Central Bank Central banks

The repeated occurrence of supply-chain disruptions since the COVID-19 pandemic reveals the need to complement traditional macroeconomic frameworks with approaches that better capture the complexity of modern economic productionstructures. This paper synthesises the findings of the ChaMP Research Network, highlighting how production network models and heterogeneity across firms, sectors and countries enrich our understanding of monetary policy transmission.

Central banks

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