Ricardo's threads | Nothing contributes so much to the prosperity and happiness of a country as high profits

Ex-central banker set to chair fintech N26 in leadership shake-up

08/27/2025 Financial Times UK

Appointment of Andreas Dombret is part of strategy to resolve conflict between investors and founders

FEDS Paper: Local Estimation for Option Pricing: Improving Forecasts with Market State Information

08/27/2025 Federal Reserve Central banks

Hyung Joo Kim and Dong Hwan OhWe propose a novel estimation framework for option pricing models that incorporates local, state-dependent information to improve out-of-sample forecasting performance.

IFDP Paper: Real Exchange Rate and Net Trade Dynamics: Financial and Trade Shocks

08/27/2025 Federal Reserve Central banks

Marcos Mac Mullen and Soo Kyung WooThis paper studies the drivers of the US real exchange rate (RER), with a particular focus on its comovement with net trade (NT) flows. We consider the entire spectrum of frequencies, as the low-frequency variation accounts for 62 and 64 percent of the unconditional variance of the RER and NT, respectively.

IFDP Paper: Geopolitical Risk and Global Banking

08/27/2025 Federal Reserve Central banks

Friederike Niepmann and Leslie Sheng ShenHow do banks respond to geopolitical risk, and is this response distinct from other macroeconomic risks? Using U.S. supervisory data and new geopolitical risk indices, we show that banks reduce cross-border lending to countries with elevated geopolitical risk but continue lending to those markets through foreign affiliates—unlike their response to other macro risks.

FEDS Paper: When Tails Are Heavy: The Benefits of Variance-Targeted, Non-Gaussian, Quasi-Maximum Likelihood Estimation of GARCH Models

08/27/2025 Federal Reserve Central banks

Todd PronoIn heavy-tailed cases, variance targeting the Student's-t estimator proposed in Bollerslev (1987) for the linear GARCH model is shown to be robust to density misspecification, just like the popular Quasi-Maximum Likelihood Estimator (QMLE). The resulting Variance-Targeted, Non-Gaussian, Quasi-Maximum Likelihood Estimator (VTNGQMLE) is shown to possess a stable limit, albeit one that is highly non-Gaussian, with an ill-defined variance.

Why personal finance is harder when you’re a migrant

08/27/2025 The Conversation UK

fizkes/Shutterstock Skilled migrants play an important role in the UK economy. But while the UK celebrates the skills they bring, it doesn’t always make it easy for them to thrive financially.