The IMF and World Bank can no longer function as instruments that discipline some member countries while deferring to others. Their challenge is to transform the exercise of power among member countries into a framework of mutual respect and cooperation.
We present novel empirical evidence on lending practices across all euro area countries, using AnaCredit data covering nearly seven million new loans issued to non-financial corporations in 2022-23. We document substantial variation in (a) the prevalence of fixed versus floating-rate loans, (b) rate fixation periods, and (c) reference rates. This variation results in lending rates being exposed to different segments of the risk-free rate yield curve which, in turn, influences their sensitivity to monetary policy changes.
The GENIUS Act is a disastrous law that poses grave and unacceptable threats to our financial and economic future. Congress must remove those threats by (1) repealing the GENIUS Act and passing legislation that requires all stablecoin providers to be FDIC-insured banks, and (2) adopting legislation that requires all crypto derivatives to comply with the rules governing non-digital derivatives under Title VII of the Dodd-Frank Act.
INET’s new data archive of historical political finance records at the National Archives marks a major step toward filling this factual void. This INET Working Paper outlines what users need to know to navigate the archive effectively and locate the data they require.
INET’s new data archive of historical political finance records at the National Archives assembles all campaign finance reports filed by political parties and presidential candidates up to 1974, the year before the Federal Election Commission was established.
Eirik Eylands BrandsaasHousing is the largest asset in U.S. household portfolios, and first-time homebuyers increasingly rely on parental transfers. This paper quantifies the contribution of parental transfers to the homeownership rate of young households. I build and estimate a life-cycle overlapping generations model with housing, where adult children and parents interact without commitment. I find that parental transfers account for 13 percentage points (27%) of young households' homeownership.
Jillian Mascelli and Megan RoddenThis paper analyzes the risks posed by future-state quantum computers, specifically the “harvest now decrypt later” (HNDL) risk. We review foundational concepts of quantum computing to address the present and ongoing threat of HNDL to currently protected data. We use the Bitcoin network as an illustrative example to study the implications of HNDL for distributed ledger cryptocurrency networks that rely upon traditional cryptography.
Jeffrey S. Allen and Max S. S. HatfieldWe examined the performance of four families of large language models (LLMs) and a variety of common fuzzy matching algorithms in assessing the similarity of names and addresses in a sanctions screening context. On average, across a range of realistic matching thresholds, the LLMs in our study reduced sanctions screening false positives by 92 percent and increased detection rates by 11 percent relative to the best-performing fuzzy matching baseline.
Yesol Huh and Matthew Vanderpool KlingThis paper introduces parallel trends forest, a novel approach to constructing optimal control samples when using difference-in-differences (DiD) in a relatively long panel data with little randomization in treatment assignment. Our method uses machine learning techniques to construct an optimal control sample that best meet the parallel trends assumption. We demonstrate that our approach outperforms existing methods, particularly with noisy, granular data.
Anne Lundgaard Hansen and Seung Jung LeeThis paper investigates the impact of the adoption of generative AI on financial stability. We conduct laboratory-style experiments using large language models to replicate classic studies on herd behavior in investment decisions. Our results show that AI agents make more rational decisions than humans, relying predominantly on private information over market trends.
