We document that inflation risk in the U.S. varies significantly over time and is often asymmetric. To analyze the macroeconomic effects of these asymmetric risks within a tractable framework, we construct the beliefs representation of a general equilibrium model with skewed distribution of markup shocks. Optimal policy requires shifting agents’ expectations counter to the direction of inflation risks.
Ruth JudsonThe incidence of currency counterfeiting and the possible total stock of counterfeits in circulation are popular topics of speculation and discussion in the press and are of substantial practical interest to the Federal Reserve, the U.S. Treasury and the United States Secret Service (USSS), who are jointly responsible for U.S. banknote design, including security features, and production.
Jin-Wook Chang, Elizabeth Klee, and Vladimir YankovWe develop a model of the repo market with strategic interactions among dealers who compete for funding in a decentralized over-the-counter market and have access to a centrally cleared interdealer market.
Climate change is a global-scale structural change, affecting economies across the world, alongside global fragmentation, digitalisation and demographics. This paper analyses the diffusion of climate policies and technologies and the role of institutions and governance in that process. It discusses theory, models and data available to date, and the empirical evidence for the 20 European Union and all 40 countries covered by the OECD’s Environmental Policy Stringency index.
Supplied/AppleTV+The highly anticipated season two of Severance, released in weekly instalments, has continued to draw interest among viewers around the world.
A gripping psychological thriller, this TV series provides an extreme illustration of the compartmentalising of work and personal life.
New research reveals that rising insurance costs, reckless building, regulatory inaction, and big banks' fossil fuel investments are driving a dangerous cycle that jeopardizes homeowners -- and financial stability for everyone.
Everyone’s freaking out about soaring homeowner’s insurance costs in the wake of devastating California fires. Right now popular anger focuses mostly on greedy insurance companies, but is that the whole story? Are they truly the main reason behind these rising premiums, or are other factors at play?
HM Treasury and the Bank of England have updated the 2018 Memorandum of Understanding on their financial relationship and published a Joint Statement.
Institutional investors, such as investment funds, are playing an increasingly important role in residential real estate markets. This raises the possibility that their actions might drive aggregate market outcomes and may change how and which macrofinancial shocks transmit to house prices. In a Bayesian vector autoregression setting, we show that a demand shock from institutional investors has a positive and persistent effect on aggregate euro area house price growth and mortgage lending volumes.
Using supervisory data of alternative investment funds investing in bonds, I exploit the COVID-19 crisis to examine the effectiveness of redemption restrictions from a financial stability perspective. First, I find that redemption restrictions reduced outflows during the March 2020 market turmoil but did not result in higher outflows in the periods following the crisis episode. Second, I find that funds with higher redemption restrictions engaged less in procyclical cash hoarding during the COVID-19 crisis period, even after controlling for the size of their outflows.
