Isabel Cairo, Hess Chung, Francesco Ferrante, Cristina Fuentes-Albero, Camilo Morales-Jimenez, Damjan PfajfarThe deep deterioration in the labor mar
Christopher Gust, Kyungmin Kim and Romina RuprechtWe propose a parsimonious framework to understand how the issuance of central bank digital currency (CBDC) might affect the financial system, the Federal Reserve’s balance sheet, and the implementation of monetary policy.
Inflation forecasts and their risks are key for monetary policy decisions. The strategy review concluded in 2021 highlighted how most Eurosystem models used to forecast inflation are linear. Linear models assume that changes in, for example, wages, always have the same fixed, proportional effect on inflation. A new machine learning model, recently developed at the ECB, captures very general forms of non-linearity, such as a changing sensitivity of inflation dynamics to prevailing economic circumstances.
Inflation forecasts and their risks are key for monetary policy decisions. The strategy review concluded in 2021 highlighted how most Eurosystem models used to forecast inflation are linear. Linear models assume that changes in, for example, wages, always have the same fixed, proportional effect on inflation. A new machine learning model, recently developed at the ECB, captures very general forms of non-linearity, such as a changing sensitivity of inflation dynamics to prevailing economic circumstances.
Celso Brunetti, Nathan Foley-Fisher, Stéphane VeraniFinancial intermediaries manage myriad interest rate risk exposures. We propose a new method to measure financial intermediaries' residual interest rate risk using high-frequency financial market data. Our method exploits all available high-frequency information and is valid under extremely weak assumptions.
Joakim A. WeillThis paper examines the provision of official flood risk information in the United States and its distributional impacts on residential flood insurance take-up. Assembling all flood maps produced after Hurricane Katrina, I document that updated maps decreased the number of properties zoned in high-risk floodplains and incorrectly omitted five million properties, primarily in neighborhoods with more Black and Hispanic residents.
Climate change has implications for price stability and the work of central banks. It may increase the volatility and heterogeneity of inflation, and hotter summers may lead to more frequent and persistent upward pressures on food and services inflation. Our empirical study provides evidence for the four largest euro area economies and outlines the relationship between temperature and inflation.
Climate change has implications for price stability and the work of central banks. It may increase the volatility and heterogeneity of inflation, and hotter summers may lead to more frequent and persistent upward pressures on food and services inflation. Our empirical study provides evidence for the four largest euro area economies and outlines the relationship between temperature and inflation.
Isabel Cairó, Avi LiptonBlack workers experience a higher unemployment rate, as well as more volatile employment dynamics, than white workers, and the racial unemployment rate gap is largely unexplained by observable characteristics. We develop a New Keynesian model with search and matching frictions in the labor market, endogenous separations, and employer discrimination against Black workers to explain these outcomes.
On the basis of insurance companies’ bond investments, I examine how shifts in investors’ demand for corporate bonds affect non-financial bond issuers. When demand for their bonds increases, firms’ financing costs decrease, which encourages them to increase their bond debt and invest more. These effects crucially depend on how credit-constrained firms are. My findings emphasise the critical role that institutional investors play in shaping non-financial firms’ financing decisions and real economic activity.
