International Journal of Central Banking

2005 - 2013

Edited by Frank Smets

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Volume 9, issue 2, 2013

Global Imbalances and Taxing Capital Flows pp. 13-44

C. A. Goodhart, M. U. Peiris and Dimitrios Panayotis Tsomocos

Like a Good Neighbor: Monetary Policy, Financial Stability, and the Distribution of Risk pp. 57-82

Evan F. Koenig

Imbalances and Policies pp. 89-100

Vincenzo Quadrini

Capital Injection, Monetary Policy, and Financial Accelerators pp. 101-145

Naohisa Hirakata, Nao Sudo and Kozo Ueda

Financial Frictions pp. 155-163

Robert E. Hall

Unconventional Monetary Policy and the Great Recession: Estimating the Macroeconomic Effects of a Spread Compression at the Zero Lower Bound pp. 165-212

Christiane Baumeister and Luca Benati

House Prices, Credit Growth, and Excess Volatility: Implications for Monetary and Macroprudential Policy pp. 219-276

Paolo Gelain, Kevin J. Lansing and Caterina Mendicino

Like a Good Neighbor: The Importance of Non-Linearities and Expectations in the Recent Crisis pp. 287-293

John Leahy

Volume 9, issue 1, 2013

Term Structure Modeling with Supply Factors and the Federal Reserve's Large-Scale Asset Purchase Progarms pp. 3-39

Canlin Li and Min Wei

QE 1 vs. 2 vs. 3...: A Framework for Analyzing Large-Scale Asset Purchases as a Monetary Policy Tool pp. 5-53

Mark L. Gertler and Peter Karadi

The Impact of Policy Initiatives on Credit Spreads during the 2007-09 Financial Crisis pp. 45-104

Alan Rai

A European History Lesson for Today’s Central Bankers pp. 109-120

Hanno Lustig

An Integrated Framework for Analyzing Multiple Financial Regulations In this companion paper to Goodhart et al. (2012), we explore the interactions of various types of financial regulation. We find that regulations that control fire-sale risk are critical for delivering financial stability and improving the welfare of savers and borrowers. We describe the combinations of capital regulations, margin requirements, liquidity regulation, and dynamic provisioning that are most effective in this respect. A policy featuring margin requirements together with countercyclical capital requirements delivers equal or better outcomes for the economy than does an unregulated financial system. But it is easy to produce combinations of regulation that look sensible but, when combined, have adverse effects on the economy pp. 109-144

Charles A. E. Goodhart, Anil K Kashyap, Dimitrios Panayotis Tsomocos and Alexandros P. Vardoulakis

Monetary Policy, macroprudential Policy, and Banking Stability: Evidence from the Euro Area pp. 121-169

Angela Maddalonia and Jose-Luis Peydro

Complexity and Monetary Policy pp. 167-204

Athanasios Orphanides and Volker Wieland

Banks' Equity Capital Frictions, Capital Ratios, and Interest Rates: Evidence from Spanish Banks pp. 183-225

Alfredo Martin-Oliver, Sonia Ruano and Vicente Salas-Fumas

Unconventional Monetary Policy Measures: Principles-Conditions-Raison d’etre pp. 229-250

Jean-Claude Trichet

Capital Flows and Financial Stability: Monetary Policy and Macroprudential Responses pp. 233-285

Filiz D. Unsal

Replumbing Our Financial System: Uneven Progress pp. 251-280

Darrell Duffie

Commentary on Macroprudential Policies pp. 287-297

Gianluca D. Benigno

A Proposal for the Resolution of Systemically Important Assets and Liabilities: The Case of the Repo Market One of the several regulatory failures behind the global financial crisis that started in 2007 has been the regulatory focus on individual, rather than systemic, risk of financial institutions. Focusing on systemically important assets and liabilities (SIALs) rather than individual financial institutions, we propose a set of resolution mechanisms, which is not only capable of inducing market discipline and mitigating moral hazard but also of addressing the associated systemic risk, for instance, due to the risk of fire sales of collateral assets. Furthermore, because of our focus on SIALs, our proposed resolution mechanisms would be easier to implement at the global level compared with mechanisms that operate at the level of individual institutional forms. We, then, outline how our approach can be specialized to the repo market and propose a repo resolution authority for reforming this market pp. 291-351

Viral V. Acharya and T. Sabri Öncü

Hong Kong’s Approach to Financial Stability pp. 299-313

Dong He

Challenges for the Future The dinner last night we shall all remember for a long time. We were fortunate enough to hear three Federal Reserve chairmen-each of them a giant in his own way - and a reply from Don Kohn that was not only insightful and thoughtful but moving too.

Tributes are one thing, but the Bank of England puts its money where its mouth is. Alan Greenspan originally loaned Don Kohn to the Bank, as we couldn’t afford the transfer fee. But as soon as Don was out of contract, we swooped to sign him for our new Financial Policy Committee (FPC). The respect and affection in which Don is held at the Bank of England is demonstrated by the presence here of three of us from the Bank.

So what lessons have Don and we at the Bank drawn from the crisis? Let me relate these to the three topics of the conference - monetary policy, liquidity provision, and macroprudential policy, three of the core functions of central banks. The financial crisis has brought these core functions closer together, highlighting the complementarities as well as blurring the lines between them. The separation of monetary from financial stability policies no longer seems so clear - cut, and this new world presents central banks with many challenges pp. 359=366

Mervyn King

Monetary Aggregates and the Central Bank’s Financial Stability Mandate Money is the balance sheet counterpart to bank lending. As such, highly procyclical components of money reflect incremental bank lending that may reverse abruptly as financial conditions deteriorate. Components of monetary aggregates that correspond to cross-border banking sector flows depend sensitively on both domestic and global financial factors and display a procyclical pattern that may be utilized in constructing a set of indicators of the vulnerability of the financial system to crises. We illustrate our arguments by drawing on the experience of Korea and by presenting an empirical analysis of crossborder banking flows into "demand-pull" and "supply-push" pp. 69-108

Hyun Jeong Kim, Hyun Song Shin and Jacho Yun

Central Banking in a Balance Sheet Recession pp. 367-372

Jaime Caruana

Central Banking: Before, During, and After the Crisis The global financial crisis and the bubbles preceding it pose mounting issues for a central bank. The Bank of Japan was the first central bank among advanced countries to confront those issues in the postwar period. Japan’s experience intellectually stimulated academics and policymakers overseas, which led to the Bank being flooded with policy proposals, including highly experimental ones. With the exception of just a few cases, however, the low growth in Japan following the bursting of a bubble was often simply interpreted as a unique episode caused by a failure to implement bold policy measures in a prompt manner. As many of you may recall, there was an oft-quoted paper coauthored by a number of Federal Reserve economists entitled "Preventing Deflation: Lessons from Japan’s Experience in the 1990s" that was released in 2002. This paper argued as follows:

[O]ur sense is that much of the failure of monetary loosening to support asset prices and to boost the economy owed to offsetting shocks rather than to a genuine breakdown of the monetary transmission mechanism.... There is little evidence that the transmission channels of monetary policy were so diminished as to have obviated the benefits of faster and sharper monetary easing in the 1991-95 period.

At that time, I found that such a view on the effectiveness of monetary policy was too sanguine [...] pp. 373-387

Masaaki Shirakawa

Volume 8, issue 4, 2012

Central Banks' Voting Records and Future Policy pp. 1-19

Roman Horvath, Katerina Smidkova and Jan Zapal

Extracting Deflation Probability Forecasts from Treasury Yields pp. 21-60

Jens H.E. Christensen, Jose A. Lopez and Glenn D. Rudebusch

DSGE Model Restrictions for Structural VAR Identification pp. 61-95

Philip Liu and Konstantinos Theodoridis

Using Estimated Models to Assess Nominal and Real Rigidities in the United Kingdom pp. 97-119

Gunes Kamber and Stephen Millard

Spoilt and Lazy: The Impact of State Support on Bank Behavior in the International Loan Market pp. 121-173

Blaise Gadanecz, Kostas Tsatsaronis and Yener Altunbasb

Modeling the Share of Cash Payments in the Economy: An Application to France pp. 175-195

Yassine Bouhdaoui and David Bounie

Volume 8, issue 3, 2012

The News Content of Macroeconomic Announcements: What if Central Bank Communication Becomes Stale? pp. 1-53

Michael Ehrmann and David Sondermann

The Rise and Fall of U.S. Inflation Persistence pp. 55-86

Meredith Beechey and Pär Österholm

How Informative Are Central Bank Assessments of Macroeconomic Risks? pp. 87-139

Malte Knüppel and Guido Schultefrankenfeld

Global Banking and the Balance Sheet Channel of Monetary Transmission pp. 141-175

Sami Alpanda and Uluc Aysun

Contagion in the Interbank Market with Stochastic Loss Given Default pp. 177-206

Christoph Memmel, Angelika Sachs and Ingrid Stein

Volume 8, issue 2, 2012

Estimated Impact of the Federal Reserve’s Mortgage-Backed Securities Purchase Program pp. 1-42

Johannes Stroebel and John B. Taylor

Discretionary Fiscal Policies over the Cycle: New Evidence Based on the ESCB Disaggregated Approach pp. 43-85

Luca Agnello and Jacopo Cimadomo

Estimating Inflation Expectations with a Limited Number of Inflation-Indexed Bonds pp. 111-142

Richard Finlay and Sebastian Wende

Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease? pp. 143-189

Chris Kubelec and Filipa Sá

Diagnosing the Financial System: Financial Conditions and Financial Stress pp. 191-239

Scott Brave and R. Andrew Butters

A Review of Allan Meltzer’s A History of the Federal Reserve, Volume 2 pp. 241-266

Edward Nelson

Volume 8, issue 1, 2012

Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease? pp. 5-46

Ruy Lama and Juan Pablo Medina

DSGE Models: I Smell a Rat (and It Smells Good) pp. 53-64

Jon Faust

Reserve Requirements for Price and Financial Stability: When Are They Effective? pp. 65-114

Christian Glocker and Pascal Towbin

Traditional versus New Keynesian Phillips Curves: Evidence from Output Effects pp. 87-109

Werner Roeger and Bernhard Herz

The Federal Reserve as an Informed Foreign Exchange Trader: 1973–1995 pp. 127-160

Michael David Bordo, Owen F. Humpage and Anna Jacobson Schwartz

Central Banking in an Open Economy pp. 167-178

Robert G. King

Food Price Pass-Through in the Euro Area: Non-Linearities and the Role of the Common Agricultural Policy pp. 179-218

Gianluigi Ferrucci, Rebeca Jiménez-Rodríguez and Luca Onorantea

Tailwinds and Headwinds: How Does Growth in the BRICs Affect Inflation in the G-7? pp. 227-266

Anna Lipinska and Stephen Millard

Import Prices and Inflation pp. 271-279

James Hamilton