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on Monetary Economics |
| By: | Mr. Luis Ignacio Jácome; Mr. Nicolas E Magud; Samuel Pienknagura; Martin Uribe |
| Abstract: | As inflation targeting (IT) turns 35, it has become a key institutional monetary framework by central banks. Yet, this paper shows that stark differences exist among inflation targeting countries in the conduct of monetary policy. Behind such heterogeneity, the legacy of a high inflation history appears as a preponderant factor. We propose a model that diverges from existing IT workhorse models by adding path-dependence (to a forward-looking model) and potentially imperfect central bank credibility. We show that achieving low inflation (hitting the target) requires more aggressive monetary policy, and is costlier from an output point of view, when individuals’ past inflationary experiences shape their inflation expectation formation. In turn, we provide empirical evidence of the need for these two theoretical additions. Countries that experienced a high level of inflation before adopting the IT regime tend to respond more aggressively to deviations of inflation expectations from the central bank’s target. We also point to the existence of a credibility puzzle, whereby the strength of a central bank’s monetary policy response to deviations from the inflation target remains broadly unchanged even as central banks gain credibility over time. Put differently, a country’s inflationary past casts a long and persistent shadow on central banks. |
| Keywords: | Inflation Targeting; Central Banking; Past Inflation |
| Date: | 2025–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2025/079 |
| By: | Michael T. Kiley; Frederic S. Mishkin |
| Abstract: | Since the initial launch of inflation targeting in the early 1990s in New Zealand and a few other countries, inflation targeting has become the predominant monetary policy strategy in large advanced and emerging market economies. Inflation targeting has been remarkably successful in anchoring inflation, likely owing to core elements of the framework across central banks. Its reaction process, which adjusts the monetary policy stance to ensure the return of inflation to target, allows it to flexibly incorporate a wide range of factors while limiting the discretionary biases that can contribute to excessive inflation. The emphasis on communications about the inflation outlook promotes transparency and accountability. As a result, inflation targeting central banks have, on balance, managed well the large shocks associated with the Global Financial Crisis and COVID. Even so, there are numerous challenges discussed in this paper that are associated with calibration and communications of forward guidance, quantitative easing/tightening, and financial stability. |
| Keywords: | Inflation targeting; Monetary policy; Central banking; Financial stability |
| JEL: | E52 E58 |
| Date: | 2025–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2025-25 |
| By: | Go Fujii (Bank of Japan); Shogo Nakano (Bank of Japan); Kosuke Takatomi (Bank of Japan) |
| Abstract: | This paper presents a quantitative analysis of how households' medium- to long-term inflation expectations are influenced by individuals' "past inflation experience" and "inflation regime - inflation trend at each point in time, " using microdata from the Bank of Japan's Opinion Survey on the General Public's Views and Behavior. The results reveal that households who have experienced averagely lower inflation rates over individuals' lifetime tend to form statistically significantly lower inflation expectations. This finding suggests that the "lower experienced inflation rates, " particularly among younger generations who have spent most of their lives in a deflationary environment, may have contributed to prolonged low inflation expectations in Japan. On the other hand, the analysis also indicates that the relationship between inflation expectations and past inflation experience is not always constant. During high-volatility inflation regimes (i.e., periods of significant price fluctuations), the relationship with past inflation experience weakens, while the relationship with inflation perceived at each point in time strengthens. Through this non-linear mechanism, the recent surge in actual inflation may have pushed up inflation expectations in Japan. Moreover, the recent increase in inflation has contributed to the rapid increase in experienced inflation rates among younger generations. This implies that the previous situation, where lower experienced inflation rates among these generations had exerted downward pressure on Japan's inflation expectations, is undergoing a shift. It is important to closely monitor how this increase in experienced inflation rates will influence future trends in long-term inflation expectations. |
| Keywords: | Inflation Expectation; Inflation Regime; Markov Switching Model; Rational Inattention |
| JEL: | C34 E31 |
| Date: | 2025–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojwps:wp25e06 |
| By: | Edward Nelson |
| Abstract: | This paper examines the revival in the analysis of monetary policy rules that took place during the 1990s. The focus is on the role that John Taylor played in this revival. It is argued that Taylor’s role—most notably through his advancing the Taylor rule, developed in 1992−1993 and increasingly permeating discussions in research and policy circles over the subsequent several years—is usefully viewed as one of building bridges. In particular, Taylor created links between a monetary policy rules tradition closely associated with Milton Friedman and an interest-rate setting tradition long associated with central banks. The rules tradition had looked unfavorably on interest-rate setting, while the central bank tradition was unfavorably disposed toward policy rules. The Taylor rule helped create a compromise between the traditions, while also advancing an interest-rate reaction function that helped create a revival during the 1990s of economic research on monetary policy rules. |
| Keywords: | Taylor rule; Interest rate rules |
| JEL: | E52 E58 |
| Date: | 2025–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2025-23 |
| By: | Amarendra Sharma |
| Abstract: | The U.S. dollar's status as the global reserve currency faces growing challenges from a 36 trillion dollar national debt, geopolitical shifts, and the emergence of digital currencies. This paper introduces the Quantum Reserve Token (QRT), a decentralized digital currency backed by quantum computational capacity - a scarce, productive resource projected to add over 1 trillion dollars to global GDP by 2035. Unlike Bitcoin's fixed-supply volatility, stablecoins' dependence on fiat trust, or central bank digital currencies' jurisdictional limits, QRT uses quantum computing power as a novel value anchor. This study develops a monetary theory-based framework for QRT, compares it to existing digital currency models, and evaluates its feasibility across technological, economic, geopolitical, and adoption dimensions. QRT offers a stable, neutral, and scalable reserve currency alternative, potentially reshaping the global monetary system. |
| Date: | 2025–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2503.22056 |
| By: | De Grauwe, Paul; Foresti, Pasquale |
| Abstract: | We study the role of agents’ limited cognitive capabilities, combined with fiscal and monetary policies, in the generation of a deflationary trap. In order to do so, we employ a heterogeneous expectations New Keynesian model in which the agents’ forecasts are based on simple heuristics. Thanks to a learning mechanism, the model is able to generate endogenous changes in agents’ beliefs that we prove to have a crucial role in the characterization of a deflationary trap. We show that the probability of hitting the zero lower bound on the interest rate, and potentially entering a deflationary trap, is not only affected by the inflation target set by the central bank. This probability is also influenced by the governments’ focus on public debt stabilization and by the agents’ memory and willingness to learn. We also show that the impact of these factors is very significant for inflation targets in the range 0–3%, while an inflation target of 4% isolates the system from the zero lower bound problem. |
| Keywords: | agents’ beliefs; deflationary trap; monetary–fiscal policy; zero lower bound |
| JEL: | E52 E61 F33 F36 |
| Date: | 2025–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:127946 |
| By: | Ingman, Gustav (Stockholm University) |
| Abstract: | Recently, there has been increasing research interest in the historical composition of central bank reserves. However, studies in this area is hindered by a lack of data, as such data spanning multiple centuries is only available for a small number of countries. This paper presents an empirical analysis of the development of the Swedish Riksbank’s foreign exchange (FX) reserves from 1823 to 2023. It introduces two new datasets: a monthly time series with the composition of the FX reserve’s components from 1908 to 2023, and an annual dataset providing the distribution of foreign currencies within the FX reserve from 1823 to 2023. This paper offers new insights into the long-run evolution of the central bank reserves of Sweden, contributing to the broader understanding of the trajectory of historical foreign currency reserves. It is published together with an appendix file containing the data. |
| Keywords: | Central; bank; balance; sheet;; Reserve; currencies;; Currency; composition |
| JEL: | E58 F31 N23 N24 |
| Date: | 2025–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0449 |
| By: | Kolasa, Marcin (International Monetary Fund); Laséen, Stefan (Monetary Policy Department, Central Bank of Sweden); Lindé, Jesper (Sveriges Riksbank and International Monetary Fund) |
| Abstract: | This paper provides a comprehensive assessment of the macroeconomic and fiscal impact of unconventional monetary tools in small open economies. Using a DSGE model, we show that the exchange rate plays a critical role to amplify the favourable impact of unconventional monetary policy while it attenuates the effectiveness of conventional fiscal policy to jointly boost output and inflation. We then use the model as a laboratory to do a case study of the Swedish Riksbank asset purchases and negative policy rates 2015-2019. We find that the Riksbank unconventional policy measures provided meaningful macroeconomic stimulus to economic activity and inflation, with the dual benefit of reducing overall government debt by about 5 percent of GDP. If conventional fiscal policy had been used to provide a commensurate output boost, inflation would have risen notably less, and the fiscal cost would have amounted to a deterioration of the government debt position with nearly 5 percent of GDP. |
| Keywords: | Monetary Policy; Asset Purchases; Quantitative Easing; Negative Interest Rate Policy; Fiscal Policy |
| JEL: | D44 E52 E58 E63 |
| Date: | 2025–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0450 |
| By: | Hugh Montag; Daniel Villar Vallenas |
| Abstract: | Using the micro data underlying the U.S. CPI, we document several findings about firm price-setting behavior during and following the Covid-19 pandemic, a period with the highest levels of inflation seen in around forty years. 1) The frequency of price change increased substantially as inflation took off, and has declined markedly as inflation has receded. 2) The average size of price changes also increased as price increases became more common, while the absolute value changed little. 3) The dispersion of price changes did not fall, contrary to the prediction of state-dependent models. 4) A menu cost model fitted on pre-pandemic pricing data has difficulty matching the increase in the frequency of price changes post-pandemic, which was not the case for the high inflation period of the 1980s. A re-calibrated menu cost model with smaller menu costs and larger idiosyncratic shocks can match the elevated frequency seen in the post-pandemic period, but not the movements in the dispersion of price changes. Such a model also implies a faster pass-through of shocks to inflation than the model fitted to pre-pandemic data. |
| Keywords: | Inflation; Sticky prices; Microdata |
| JEL: | D40 E31 D22 |
| Date: | 2025–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2025-24 |
| By: | Jesper Lindé; Marcin Kolasa; Stefan Laseen |
| Abstract: | This paper provides a comprehensive assessment of the macroeconomic and fiscal impact of unconventional monetary tools in small open economies. Using a DSGE model, we show that the exchange rate plays a critical role to amplify the favourable impact of unconventional monetary policy while it attenuates the effectiveness of conventional fiscal policy to jointly boost output and inflation. We then use the model as a laboratory to do a case study of the Swedish Riksbank asset purchases and negative policy rates 2015-2019. We find that the Riksbank unconventional policy measures provided meaningful macroeconomic stimulus to economic activity and inflation, with the dual benefit of reducing overall government debt by about 5 percent of GDP. If conventional fiscal policy had been used to provide a commensurate output boost, inflation would have risen notably less, and the fiscal cost would have amounted to a deterioration of the government debt position with nearly 8 percent of GDP. |
| Keywords: | Monetary Policy; Asset Purchases; Quantitative Easing; Negative Interest Rate Policy; Fiscal Policy |
| Date: | 2025–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2025/066 |
| By: | Damjan Pfajfar; Fabian Winkler |
| Abstract: | We document novel facts about US household preferences over inflation and monetary policy tradeoffs. Many households were attentive to news about monetary policy and to interest rates in 2023. The median household perceives the Federal Reserve's inflation objective to be 3 percent, but would prefer it to be lower. Quantifying the tradeoff between inflation and unemployment, we find an average acceptable sacrifice ratio of 0.6, implying that households are likely to find disinflation costly. Average preferences are well represented by a non-linear loss function with near equal weights on inflation and unemployment. These preferences also exhibit sizable demographic heterogeneity. |
| Keywords: | household survey; attention; inflation target; sacrifice ratio; dual mandate |
| JEL: | D12 E52 E58 |
| Date: | 2025–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:99898 |
| By: | Hess, Simon |
| Abstract: | This paper studies the effects of introducing a Central Bank Digital Currency (CBDC) on economic output, bank intermediation and financial stability in a closed economy using an Agent-based Stock Flow Consistent (AB-SFC) Model. Thereby a digital bank run is simulated across various economic environments with different monetary policy and bank bankruptcy regimes. According to the model, non-remunerated CBDC issued in a positive-interest environment with a corridor system may increase GDP through increased seigniorage income and government spending. Also bank funding becomes more expensive since bank deposit stickiness is prevented. Non-remunerated CBDC issued in a zero-interest environment has no impact since there is no distributional effect of the interest payments. In a floor-system where the interest rate on CBDC matches the policy rate, CBDC also counteracts deposit stickiness and redistributes bank profits from shareholders to depositors. Thereby CBDC improves the transmission of the policy rate to households and firms. The bank bankruptcy regime also affects the outcome. While CBDC makes no difference in a bailout regime it does in a bail-in regime where it decreases inequality and distributes bank rescue costs evenly among households and firms, potentially enhancing financial stability. Introducing CBDC within a deposit insurance system postpones bank rescue payments, which creates an additional dynamic in GDP. |
| Keywords: | central bank digital currency, agent-based model, bank run, bailout, bail-in, financial stability |
| JEL: | E42 E58 G21 G23 G28 |
| Date: | 2025 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:roswps:171 |
| By: | DiGiuseppe, Matthew; Garriga, Ana Carolina; Kern, Andreas |
| Abstract: | How does partisanship affect inflation expectations? While most research focuses on how inflation impacts political approval and voter behavior, we analyze the political roots of inflation expectations. We argue that elections serve as key moments when citizens update their economic outlook based on anticipated policy changes, and that partisanship influences these re-evaluations. Using a two-wave panel survey conducted before and after the 2024 U.S. Presidential Election, we show that partisan alignment strongly shapes inflation expectations. Democrats reported heightened inflation expectations, anticipating inflationary policies under a Trump administration, while Republicans expected inflation to fall. These shifts reflect partisan interpretations of economic policy rather than objective forecasts. We also analyze the characteristics of those who are more likely to update inflation expectations and in what direction. Importantly, we verify that individuals with strong partisan attitudes exhibit less anchored inflation expectations. Our findings have implications beyond the case under analysis. From a policy perspective, our results underscore the challenges central banks face in anchoring inflation expectations in an era of political polarization, where economic perceptions differ sharply across partisanship lines. |
| Keywords: | Inflation expectations, Survey data, Partisanship, United States, Polarization |
| JEL: | D83 E03 E31 E58 Y80 |
| Date: | 2025–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:124391 |
| By: | Pei Kuang; Michael Weber; Shihan Xie; Michael Weber |
| Abstract: | This paper examines the impact of political polarization on public trust in the Fed and its influence on macroeconomic expectations. Using a large-scale survey experiment which we fielded on President Trump’s 2025 inauguration day, we study how households form beliefs about the Fed regarding its political leaning, independence, and trustworthiness. Political alignment significantly shapes perceptions: individuals who view the Fed as politically aligned report higher independence of and trust in the Fed, leading to lower inflation expectations and uncertainty. Strategic communication on institutional structure and policy objectives effectively mitigates perception biases, reinforcing the Fed’s credibility and enhancing its policy effectivenes. |
| Keywords: | central bank communication, partisan, trust, expectations |
| JEL: | D83 D84 D72 E70 E31 |
| Date: | 2025 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11708 |
| By: | Uluc Aysun (Department of Economics, College of Business Administration, University of Central Florida); Sewon Hur (Federal Reserve Bank of Dallas); Zeynep Yom (Department of Economics, Villanova School of Business, Villanova University) |
| Abstract: | We build and embed an endogenous growth mechanism into an otherwise standard New Keynesian DSGE model to investigate the transmission of monetary policy. Endogenous growth is determined by the R&D expenditures of monopolistically competitive firms and monetary policy, through its effects on these expenditures, can have supply-side effects in addition to its usual demand-side effects. After solving the model and estimating it with a Bayesian methodology, we find that R&D activity amplifies the responses to monetary policy shocks. An empirical investigation that uses firm-level COMPUSTAT data supports this result. Specifically, we find that monetary policy transmission operates more strongly through R&D intensive firms. |
| Keywords: | R&D, endogenous growth, DSGE, monetary policy, COMPUSTAT |
| JEL: | E24 E32 O30 O33 |
| Date: | 2025–05 |
| URL: | http://d.repec.org/n?u=RePEc:vil:papers:61 |
| By: | Yang, Dianyi |
| Abstract: | Since 2022, central bank losses have been prevalent in advanced economies due to previous quantitative easing and recent inflationary pressures. This paper focuses on the unique case of the United Kingdom, where the government promised in advance to cover any central bank losses arising from quantitative easing. This promise is known as the indemnity. A game-theoretical model is proposed to explain the causes and effects of such indemnity. The model's predictions about the indemnity's effect on central bank profitability are empirically examined. Using the novel Dynamic Multilevel Latent Factor Model (DM-LFM), the indemnity is found to have significantly boosted the Bank of England's profits in the deflationary environment after 2008, but exacerbated its losses under the recent inflationary pressure since 2022. The theoretical model suggests the pronounced effects are due to the Bank of England's high sensitivity to losses and the UK government's moderate fiscal liberalism. Therefore, the British experience should not be generalised. Nevertheless, the theoretical and empirical lessons can inform policy-makers about future institutional designs concerning the fiscal-monetary interactions and the public finance-price stability trade-off. |
| Date: | 2024–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:wz75m_v2 |
| By: | Shovon Sengupta; Bhanu Pratap; Amit Pawar |
| Abstract: | The conventional linear Phillips curve model, while widely used in policymaking, often struggles to deliver accurate forecasts in the presence of structural breaks and inherent nonlinearities. This paper addresses these limitations by leveraging machine learning methods within a New Keynesian Phillips Curve framework to forecast and explain headline inflation in India, a major emerging economy. Our analysis demonstrates that machine learning-based approaches significantly outperform standard linear models in forecasting accuracy. Moreover, by employing explainable machine learning techniques, we reveal that the Phillips curve relationship in India is highly nonlinear, characterized by thresholds and interaction effects among key variables. Headline inflation is primarily driven by inflation expectations, followed by past inflation and the output gap, while supply shocks, except rainfall, exert only a marginal influence. These findings highlight the ability of machine learning models to improve forecast accuracy and uncover complex, nonlinear dynamics in inflation data, offering valuable insights for policymakers. |
| Date: | 2025–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2504.05350 |
| By: | Giovanni Favara; Francesca Loria; Greg Marchal; Egon Zakrajšek |
| Abstract: | The steady rise in income inequality and the broad range of actions undertaken by central banks in recent years – first to stabilize the global economy during the 2008-09 financial crisis and second to stave off the pandemic-induced economic collapse – have brought the distributional footprint of monetary policy to the forefront of the economic policymaking discussion (Bernanke, 2015; Draghi, 2016; BIS, 2021). |
| Date: | 2025–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2025-03-31-2 |
| By: | Eiji Fujii; Xingwang Qian |
| Abstract: | This paper investigates the cyclicality of international reserves and their role in macroeconomic stabilization. We challenge two widely held assumptions: (1) central banks typically manage IR counter-cyclically—accumulating reserves during booms and drawing them down during downturns; and (2) such interventionist management is primarily associated with rigid exchange rate regimes. Analyzing data from 179 countries (1972-2022), we find that counter-cyclical IR management is less common than often assumed. However, as a macroprudential policy, counter-cyclical international reserves significantly reduce output volatility, particularly when interacting with de facto flexible exchange rate regimes. This stabilizing effect is especially pronounced in emerging markets between the 1997 Asian financial crisis and the 2008 global financial crisis. |
| Keywords: | international reserves, cyclicality, exchange rate regime, macroprudential policy, output volatility. |
| JEL: | F34 F31 |
| Date: | 2025 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11800 |
| By: | Carro, Adrian; Hinterschweiger, Marc; Uluc, Arzu; Borsos, András; Kaszowska-Mojsa, Jagoda (Institute for New Economic Thinking, University of Oxford); Glielmo, Aldo (Bank of Italy) |
| Abstract: | Over the past decade, agent-based models (ABMs) have been increasingly employed as analytical tools within economic policy institutions. This chapter documents this trend by surveying the ABM-relevant research and policy outputs of central banks and other related economic policy institutions. We classify these studies and reports into three main categories: (i) applied research connected to the mandates of central banks, (ii) technical and methodological research supporting the advancement of ABMs; and (iii) examples of the integration of ABMs into policy work. Our findings indicate that ABMs have emerged as effective complementary tools for central banks in carrying out their responsibilities, especially after the extension of their mandates following the global financial crisis of 2007-2009. While acknowledging that room for improvement remains, we argue that integrating ABMs into the analytical frameworks of central banks can support more effective policy responses to both existing and emerging economic challenges, including financial innovation and climate change. |
| Keywords: | Agent-based models, household analysis, financial institutions, central bank policies, monetary policy, prudential policies |
| JEL: | C63 E37 E58 |
| Date: | 2025–02 |
| URL: | http://d.repec.org/n?u=RePEc:amz:wpaper:2025-05 |
| By: | Gianni Amisano; Travis J. Berge; Simon C. Smith |
| Abstract: | Following the pandemic, inflation has been high and variable. Future inflation likely depends on expected or underlying inflation—the inflation rate that would prevail in the absence of resource slack, supply shocks, and other temporary disturbances to inflation. We introduce a new estimate of underlying inflation, which we produce by averaging many individual estimates from statistical filters and macroeconometric models. We estimate that between 2019 and 2022 underlyling inflation moved up from 1.8 to 2.1 percent and the risks around it increased and became skewed to the upside. Underlying inflation has remained at 2.1 percent since 2022, although risks around it have decreased in magnitude and become balanced. |
| Date: | 2025–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2025-03-25 |
| By: | Stefan Avdjiev; Leonardo Gambacorta; Linda S Goldberg; Stefano Schiaffi |
| Abstract: | The period after the Global Financial Crisis (GFC) was characterized by a considerable risk migration within global liquidity flows, away from cross-border bank lending towards international bond issuance. We show that the post-GFC shifts in the risk sensitivities of global liquidity flows are related to the tightness of the balance sheet (capital and leverage) constraints faced by international (bank and non-bank) lenders and to the migration of borrowers across funding sources. We document that the risk sensitivity of global liquidity flows is higher when funding is provided by financial intermediaries that are facing greater balance sheet constraints. We also provide evidence that the post-GFC migration of borrowers from cross-border loans to international debt securities was associated with a decline in the risk sensitivity of global liquidity flows to EME borrowers. |
| Keywords: | global liquidity, international bank lending, international bond flows, emerging markets, advanced economies |
| JEL: | G10 F34 G21 |
| Date: | 2025–04 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1262 |
| By: | Cuba-Borda, Pablo (Federal Reserve); Jean-Paul L'Hullier (Brandeis University) |
| Abstract: | A sine qua non condition for inflation bursts is supply deficiency—caused either by exogenous shocks to aggregate supply (supply disruptions), or by excessive aggregate demand (supply-constrained demand booms). Aggregate demand booms, even big ones, that do not trigger supply deficiencies, are not inflationary. We survey the literature on the topic and discuss the evidence. Absent glaring macroeconomic mismanagement, we argue that viewing supply issues as the root cause for inflationary episodes provides an accurate account of when and where inflation occurs. Supply deficiencies typically lead to high, but ultimately moderate, inflation rates. |
| Date: | 2025–03 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:137 |
| By: | Stefan Gissler; Samuel J. Hempel; R. Jay Kahn; Patrick E. McCabe; Borghan N. Narajabad |
| Abstract: | In this note, we show that nonbank lenders' behavior as cash lenders can help discern early informative signals about the scarcity of reserves. Reserves, which are deposits that banks and other financial institutions hold at the Federal Reserve, are the most liquid asset on banks' balance sheets and hence play a central role in banks' liquidity management. |
| Date: | 2025–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2025-03-28-4 |
| By: | Oussama Zouabi (LEAD - Laboratoire d'Économie Appliquée au Développement - UTLN - Université de Toulon, UTLN - Université de Toulon); Michel Dimou (LEAD - Laboratoire d'Économie Appliquée au Développement - UTLN - Université de Toulon, UTLN - Université de Toulon) |
| Abstract: | This paper aims to examine the relationship between climate shocks and agri-food and overall inflation in Tunisia for the period 1985-2000. Climate shocks represent extreme weather phenomena such as droughts, heat waves, and floods To address this question, the paper uses an extensive Nonlinear Autoregressive Distributed Lag (NARDL) model that incorporates a Pesaran cointegration test, enabling the exploration of potential asymmetric effects stemming from positive and negative climate shocks on both general and agri-food inflation in the short and the long run. The key findings of the paper indicate that positive temperature shocks exert a significant inflationary impact on all agricultural products, the food industry, and, more broadly, the entire Tunisian economy, both in the short and long term. Conversely, a sudden shortage in rainfall does not significantly affect either agricultural or food prices, nor does it influence the general price index. This result is rather unexpected since long-term rainfall trends significantly affect agricultural production, emphasizing the importance of appropriate agricultural policies such as irrigation. |
| Keywords: | Tunisia, Climate shocks, NARDL model, Climate inflation, Climate change Agriculture climate inflation NARDL Tunisia Q50 Q54 Q10 P24 C15, Climate change, Agriculture, climate inflation, NARDL, Tunisia Q50, Q54, Q10, P24, C15 |
| Date: | 2024–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04985855 |
| By: | Kabir Dasgupta; Nicolas Lewin; Jake D. Orchard |
| Abstract: | Following the COVID-19 pandemic, consumer sentiment was low despite historically low unemployment and high wage growth. This same period coincided with inflation rates that were the highest in a generation. |
| Date: | 2025–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2025-03-28-2 |
| By: | Ganev, Georgy |
| Abstract: | No, the original barter theory of the origins of money (“the barter story” for short) has not been rejected. What has been rejected is a narrowly specific, and apparently parentless, version of the barter story based on the standard neoclassical synthesis modelling assumptions of homo œconomicus and fully-fledged market economies. As in all other myths, the myth of the rejection of the barter story contains a grain of truth, namely, that the actually lived human communities are much more complex and nuanced than assumed by the standard neoclassical synthesis economics rendition of the story. These grains of truth, as valuable and helpful as they can be for the improvement of economics, cannot change the conclusion that the original barter story remains standing. |
| Keywords: | barter; money; origins of money |
| JEL: | A12 B15 B29 E49 N10 |
| Date: | 2025–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:124237 |