Interest rates have been extremely low since the Global Crisis. This column surveys the recent debate over whether they will remain low, or return to normal. While an unequivocal answer is not possible, the evidence suggests a significant decline in average real rates – perhaps to as low as 1%.
John C. Williams, Thursday, November 26, 2015 - 00:00
Christopher J. Ruhm, Thursday, October 29, 2015 - 00:00
Conventional wisdom tells us that health deteriorates when the economy weakens and improves when it strengthens. Some research tentatively agrees, but there is a marked dearth of challenges and robust research. This column presents new evidence suggesting that the reductions in mortality occurring during typical economic downturns also occur in periods of crisis, adding useful caveats for different types of downturns and crises.
Jon Danielsson, Morgane Fouché, Robert Macrae, Tuesday, October 20, 2015 - 00:00
There has always been conflict between macro- and microeconomic regulation. Microeconomic policy reigns supreme during good times, and macro during bad. This column explains that while the macro and micro objectives have always been present in regulatory design, their relative importance has varied according to the changing requirements of economic, financial and political cycles. The conflict between the two seems set to deepen and so, regardless of which ‘wins’, policymakers must not undermine the central bank's execution of monetary policy.
Thorsten Beck, José-Luis Peydró, Monday, September 7, 2015 - 00:00
The past five years have given European countries useful insights on what works in crisis resolution. The lessons should be viewed as forward-looking contributions to the institutional and policy reform agenda in Europe, especially in the Eurozone. The Eurozone is not doomed, it just needs better economic and financial policies.
Nathan Sussman, Osnat Zohar, Wednesday, September 16, 2015 - 00:00
The 2014 decline in oil prices lowered short-run inflation. Before the Global Crisis, the medium-term correlation between oil prices and inflation was weak, but it has become much stronger since the onset of the Crisis. This column suggests that following the onset of the Crisis, inflation expectations reacted quite strongly to global demand conditions and oil supply shocks. The public’s belief in the ability of monetary authorities to stabilise inflation at the medium-term horizon has deteriorated.
Donato Masciandaro, Davide Romelli, Friday, August 28, 2015 - 00:00
Since the onset of the Global Crisis, a number of central bank reforms have been implemented. This column suggests that since the Crisis, a silent restoration towards lower central bank independence might have been in place. The trend is more pronounced in non-OECD countries and, in particular, for the level of operational independence. The findings suggest that governments might be willing to trade off central bank independence to cope with concerns regarding financial stability, high debt and unemployment levels.
Xavier Freixas, Luc Laeven, José-Luis Peydró, Wednesday, August 5, 2015 - 00:00
There has been much talk about using macroprudential policy to manage systemic risk and reduce negative spillovers, but there is little agreement on how it could be operationalised. This column highlights the findings of a new book on the topic and offers a framework for operationalising macroprudential policy. Macroprudential measures, together with higher capital requirements, could be used to tame the build-up of leverage and credit booms in order to prevent financial crises.
Esa Jokivuolle, Jussi Keppo, Xuchuan Yuan, Thursday, July 23, 2015 - 00:00
Bankers’ compensation has been indicted as a contributing factor to the Global Crisis. The EU and the US have responded in different ways – the former legislated bonus caps, while the latter implemented bonus deferrals. This column examines the effectiveness of these measures, using US data from just before the Crisis. Caps are found to be more effective in reducing the risk-taking by bank CEOs.
Jakob de Haan, Dirk Schoenmaker, Monday, July 6, 2015 - 00:00
The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European banking union. It argues for the inclusion of these topics in curricula for the next generation of finance students.
Jonathan Ashworth, Charles A.E. Goodhart, Tuesday, April 28, 2015 - 00:00
When panic strikes, people tend to withdraw cash. While there were upticks in currency-to-deposit ratios in the autumn of 2008 and early 2009, they were modest and very short-lived compared to the Great Depression. This column argues that leading central banks learnt from the 1930s mistakes and acted decisively to check the panic. Key policies were the existence and upgrading of deposit insurance schemes, massive liquidity injections, and rapid cutting of interest rates. The most important were the guarantees that the biggest banks wouldn’t fail.
Donato Masciandaro, Davide Romelli, Sunday, April 26, 2015 - 00:00
In the aftermath of the Global Crisis, many countries increased their central banks’ involvement in financial supervision. This column uses a novel dataset to argue that financial crises episodes significantly increase the probability of reforms in the financial structure. More interestingly, the authors find evidence of a ‘bandwagon effect’ by showing that politicians are more likely to undertake reforms when their peers do so.
Tito Boeri, Pietro Garibaldi, Espen R. Moen, Thursday, March 19, 2015 - 00:00
Anusha Chari, Peter Blair Henry, Friday, March 6, 2015 - 00:00
Giuseppe Bertola, Anna Lo Prete, Saturday, February 28, 2015 - 00:00
Pınar Yeşin, Saturday, February 21, 2015 - 00:00
Philippe Bacchetta, Kenza Benhima, Céline Poilly, Thursday, February 19, 2015 - 00:00
Juan Dolado, Monday, February 9, 2015 - 00:00
Bas Bakker, Joshua Felman, Friday, February 6, 2015 - 00:00
Philippe Karam, Ouarda Merrouche, Moez Souissi, Rima Turk, Monday, February 2, 2015 - 00:00
Simon Wren-Lewis, Friday, January 30, 2015 - 00:00