Found 10 article(s) for author 'Central Banking'

Christine Lagarde enters the European Central Bank at a perilous moment

Christine Lagarde enters the European Central Bank at a perilous moment. Lawrence Summers, July 9, 2019, Opinion, “The announcement last week that Christine Lagarde would be leaving her post as managing director of the International Monetary Fund to become president of the European Central Bank marks what may be the most important change in the leadership of the international financial system in decades. At a time when the United States is abdicating its systemic responsibilities and focusing only on narrow commercial interests, the role Lagarde is leaving and the one she is entering are of preeminent importance.Link

 

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How Central-Bank Independence Dies

How Central-Bank Independence Dies. Kenneth Rogoff, May 31, 2019, Opinion, “Since the world’s major central banks came to the global economy’s rescue in 2008, they have had more and more tasks foisted upon them, even as some politicians question their expanded role and others seek to undermine their policymaking autonomy. To escape this dilemma, monetary authorities must get back to doing what they do best.Link

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Explaining Inflation Inertia

Explaining Inflation Inertia. Carmen Reinhart, May 6, 2019, Opinion, “Despite central bankers’ concerted efforts, credible price-stability targets have proved elusive in countries like Argentina, where inflation is soaring, and Japan, which can’t shake the specter of deflation. What can governments do to influence inflation expectations when central banks’ policies prove insufficient to the task?Link

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Negative Nominal Interest Rates and the Bank Lending Channel

Negative Nominal Interest Rates and the Bank Lending Channel. Lawrence Summers, January 2019, Paper, “Following the crisis of 2008, several central banks engaged in a new experiment by setting negative policy rates. Using aggregate and bank level data, we document that deposit rates stopped responding to policy rates once they went negative and that bank lending rates in some cases increased rather than decreased in response to policy rate cuts. Based on the empirical evidence, we construct a macro-model with a banking sector that links together policy rates, deposit rates and lending rates. Once the policy rate turns negative, the usual transmission mechanism of monetary policy through the bank sector breaks down. Moreover, because a negative policy rate reduces bank profits, the total effect on aggregate output can be contractionary. A calibration which matches Swedish bank level data suggests that a policy rate of -0.50 percent increases borrowing rates by 15 basis points and reduces output by 7 basis points.Link

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings. Gita Gopinath, Jeremy Stein, May 2018, Paper, “We develop a model that shows how the currency denomination of a country’s imports influences the funding structure of its banking system, and in turn, the currency composition of its central bank’s reserve holdings. The link between the dollar’s role in bank funding and its role as a central bank reserve currency is stronger when the country’s fiscal capacity is limited, and when exchange rates are volatile. In the data, there is a pronounced cross-country relationship between the fraction of imports that are dollar invoiced, and the fraction of central-bank foreign-exchange reserves that are held in dollars.Link

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings. Gita Gopinath, Jeremy Stein, 2018, Paper, “In recent work (Gopinath and Stein (2017)) we explore how a currency like the dollar can become entrenched as a dominant global currency, focusing on the two-way feedback between trade invoicing and banking structure. The basic idea is that when a larger share of a country’s imports are invoiced in dollars, its citizens have a greater demand for dollar-denominated safe claims.Link

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Central Bankers Should’ve Been More Aggressive

Central Bankers Should’ve Been More Aggressive. Kenneth Rogoff, July 20, 2017, Audio, “Kenneth Rogoff, a professor at Harvard University, says central bankers should’ve been more aggressive during the financial crisis and that India’s demonetization was done too quickly. Prior to that, Kathy Matsui, chief Japan equity strategist at Goldman Sachs Japan, says Japanese companies are strong. Robert Shiller, a professor at Yale University, says New York City housing is more affordable than people think. Finally, New Orleans Mayor Mitch Landrieu says Washington’s stuck making the same mistakes in health care.Link

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Has the Financial Crisis Permanently Changed the Practice of Monetary Policy? Has It Changed the Theory of Monetary Policy?

Has the Financial Crisis Permanently Changed the Practice of Monetary Policy? Has It Changed the Theory of Monetary Policy? Benjamin Friedman, May 2014, Paper. “I argue in this paper that one of the two forms of hitherto unconventional monetary policy that many central banks have implemented in response to the 2007 financial crisis – large-scale asset purchases, or to put the matter more generically, use of the central bank’s balance sheet as a distinct tool of monetary policy – is likely to become part of the standard toolkit of monetary policymaking in normal times as well. As intended, these purchases have lowered long-term…Link

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Limits of Monetary Policy in Theory and Practice

Limits of Monetary Policy in Theory and Practice. Carmen Reinhart, October 2011, Paper. “The view that modest alterations to monetary policy have vast consequences for national economies would seem to be inconsistent with theory and evidence. Most modern economic models (represented authoritatively by Woodford 2005) offer limited scope for policy surprises. The basic logic is that spending depends on decisions capitalized over the longer term, and small perturbations in the level of the short-term interest rate do not matter much to those values. More fundamentally, the prominence accorded to authorities…” Link verified March 28, 2014

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