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on Banking |
| By: | Ricardo Correa; Julian di Giovanni; Linda S. Goldberg; Camelia Minoiu |
| Abstract: | This paper uses U.S. loan-level credit register data and the 2018–2019 Trade War to test for the effects of international trade uncertainty on domestic credit supply. We exploit cross-sectional heterogeneity in banks’ ex-ante exposure to trade uncertainty and find that an increase in trade uncertainty is associated with a contraction in bank lending to all firms irrespective of the uncertainty that the firms face. This baseline result holds for lending at the intensive and extensive margins. We document two channels underlying the estimated credit supply effect: a wait-and-see channel by which exposed banks assess their borrowers as riskier and reduce the maturity of their loans and a financial frictions channel by which exposed banks facing relatively higher balance sheet constraints contract lending more. The decline in credit supply has real effects: firms that borrow from more exposed banks experience lower debt growth and investment rates. These effects are stronger for firms that are more reliant on bank finance. |
| JEL: | F34 F42 G21 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31860&r=ban |
| By: | Adrien d'Avernas; Andrea L. Eisfeldt; Can Huang; Richard Stanton; Nancy Wallace |
| Abstract: | The deposit business differs at large versus small banks. We provide a parsimonious model and extensive empirical evidence supporting the idea that much of the variation in deposit-pricing behavior between large and small banks reflects differences in "preferences and technologies." Large banks offer superior liquidity services but lower deposit rates, and locate where customers value their services. In addition to receiving a lower level of deposit rates on average, customers of large banks exhibit lower demand elasticities with respect to deposit rate spreads. As a result, despite the fact that the locations of large-bank branches have demographics typically associated with greater financial sophistication, large-bank customers earn lower average deposit rates. Our explanation for deposit pricing behavior challenges the idea that deposit pricing is mainly driven by pricing power derived from the large observed degree of concentration in the banking industry. |
| JEL: | E0 E40 E44 G0 G2 G21 G28 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31865&r=ban |
| By: | Matteo Crosignani; Hanh Le |
| Abstract: | We find that banks differ in their propensity to lend to minorities based on their stakeholders’ aversion to inequality. Using mortgage application data collected under the Home Mortgage Disclosure Act, we document a large and persistent cross-sectional variation in banks’ propensity to lend to minorities. Inequality-averse banks have a higher propensity to lend to borrowers in high-minority areas and, within census tracts, to non-white borrowers compared to other banks. This higher propensity (i) is not explained by selection of applicants, (ii) allows these banks to retain and attract their inequality-averse stakeholders, and (iii) does not predict worse ex-post loan performance. |
| Keywords: | inequality aversion; mortgage lending; minority borrowers; Racial discrimination |
| JEL: | E51 G21 J15 |
| Date: | 2023–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:97349&r=ban |
| By: | Giuseppe Pulina |
| Abstract: | On average, consumer debt per household is twice as high in Luxembourg as in the euro area. Among lower-income households, consumer debt is even three times higher in Luxembourg. However, since incomes are also higher in Luxembourg, the ratio of consumer debt to gross income is comparable in Luxembourg and the euro area. This paper uses household survey data to compare the prevalence of consumer debt in Luxembourg and the euro area. It focuses on the two major components of consumer debt, installment loans and credit card debt, linking the probability of contracting these types of debt to individual household socio-economic characteristics. In the euro area, households with mortgage debt are more likely to take out consumer debt, highlighting the need to better understand this behavior and its potential link to financial vulnerability. Credit cards, instead, are more common in Luxembourg than in the euro area, but the share of households holding credit card debt is similar. Many euro area households that hold credit card debt also hold liquid assets, often in amounts sufficient to repay this debt. Credit constraints and differences in individual risk preferences may help to explain this otherwise puzzling behavior. |
| Keywords: | household finance, consumer debt, installment loans, credit cards. |
| JEL: | G51 D14 D91 E21 G02 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp175&r=ban |
| By: | Loretta J. Mester |
| Abstract: | Today I will speak about financial system resilience, its interactions with monetary policy in the context of today’s economy, and some recommendations for increasing the resilience of the banking system. In less than two decades, the world has experienced two historically deep negative shocks to the global economy and financial system. While their causes were different, the global financial crisis of 2008 and the COVID-19 pandemic that hit in 2020 each necessitated the intervention of central banks in ways not contemplated in earlier decades. This spring, the Fed was required to intervene again to address stresses in the banking system that were precipitated by the failures of Silicon Valley Bank (SVB) and Signature Bank. This stress episode was a painful reminder that whether we are operating in a low-interest-rate environment or in a high-interest-rate environment, financial system vulnerabilities can lead to adverse shocks being propagated across the financial system and sometimes very quickly. The episode also underscored that to promote financial system resilience, financial institutions must properly manage risks and supervisors must effectively monitor risks. |
| Keywords: | financial stability; monetary policy; Financial Resilience |
| Date: | 2023–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcsp:97394&r=ban |
| By: | Peter Anagnostakos; Jason Bram; Benjamin Chan; Natalia Fischl-Lanzoni; Hasan Latif; James M. Mahoney; Donald P. Morgan; Ladd Morgan; Ivelisse Suarez |
| Abstract: | We study Puerto Rico’s experience after the severe hurricane season of 2017 to better understand how extreme weather disasters affect bank stability and their ability to lend. Despite the devastation wrought by two category 5 hurricanes in a single month, we find relatively modest and transitory impacts on bank performance with no evident decline in lending capacity. We discuss various mitigants that help limit bank exposure to extreme weather and whether these mitigants may be vulnerable given the potential for more severe and more impactful climate events. |
| Keywords: | climate change; physical risks; hurricanes; banks; Puerto Rico |
| JEL: | G21 Q54 |
| Date: | 2023–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:97348&r=ban |
| By: | Sümeyra Atmaca; Karolin Kirschenmann; Steven Ongena; Koen Schoors |
| Abstract: | We employ proprietary data from a large bank to analyze how – during crisis – deposit insurance affects depositor behavior. Our focus is on Belgium where the government increased explicit deposit insurance coverage and implemented implicit deposit insurance arrangements. Estimating sorting below the respective insurance limits shows that depositors are aware of and understand these interventions. Difference-in-differences estimates show that both the increase in the explicit deposit insurance limit and the implicit deposit insurance had the intended calming effect on depositors. Close depositor-bank relationships mitigate these effects, while political trust seems to boost the general effectiveness of such government policies. |
| Keywords: | deposit insurance; coverage limit; implicit deposit guarantee; bank nationalization; depositor heterogeneity |
| JEL: | G21 G28 H13 N23 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_476&r=ban |
| By: | Minati Rath; Hema Date |
| Abstract: | In many real-world datasets, rows may have distinct characteristics and require different modeling approaches for accurate predictions. In this paper, we propose an adaptive modeling approach for row-type dependent predictive analysis(RTDPA). Our framework enables the development of models that can effectively handle diverse row types within a single dataset. Our dataset from XXX bank contains two different risk categories, personal loan and agriculture loan. each of them are categorised into four classes standard, sub-standard, doubtful and loss. We performed tailored data pre processing and feature engineering to different row types. We selected traditional machine learning predictive models and advanced ensemble techniques. Our findings indicate that all predictive approaches consistently achieve a precision rate of no less than 90%. For RTDPA, the algorithms are applied separately for each row type, allowing the models to capture the specific patterns and characteristics of each row type. This approach enables targeted predictions based on the row type, providing a more accurate and tailored classification for the given dataset.Additionally, the suggested model consistently offers decision makers valuable and enduring insights that are strategic in nature in banking sector. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.10799&r=ban |
| By: | Tihana Škrinjarić (Bank of England, United Kingdom) |
| Abstract: | This paper contributes to the literature on macroprudential stance assessment in two ways. Firstly, it gives a comprehensive review of related literature to see the current directions research and policy practice, alongside the problems. Secondly, it empirically evaluates different aspects and issues when assessing the macroprudential stance. The empirical part of the paper focuses on country that has a fairly active macroprudential policy to establish the initial framework for assessing the effectiveness of macroprudential policy in Croatia. Results show that somewhat different results could be obtained based on variable definition and selection. This means that measuring macroprudential stance is difficult, as it depends on the definition of the macroprudential policy variable, selection of other important variables in the analysis, as well as other methodological factors. |
| Keywords: | systemic risk, macroprudential policy, financial stability, financial conditions, quantile regression, policy assessment, macroprudential stance, Q-VAR, growth at risk |
| JEL: | E32 E44 E58 G01 G28 C22 |
| Date: | 2023–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:hnb:wpaper:72&r=ban |
| By: | Congressional Budget Office |
| Abstract: | The Congressional Budget Office has developed a method for estimating the present value of the lifetime administrative costs of certain federal credit programs—referred to as the administrative cost subsidy. That method produces estimates for a single cohort of loans or loan guarantees that are calculated on a basis similar to that used for credit subsidy estimates. By combining the administrative cost subsidy with the credit subsidy, an estimate of the total cost of selected credit programs may be calculated. |
| JEL: | G10 G21 |
| Date: | 2023–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:59507&r=ban |
| By: | Syngjoo Choi; Bongseob Kim; Young-Sik Kim; Ohik Kwon |
| Abstract: | Privacy protection is among the key features to consider in the design of central bank digital currency (CBDC). Using a nationally representative sample of over 3, 500 participants, we conduct a randomized online survey experiment to examine how the willingness to use CBDC as a means of payment varies with the degree of privacy protection and information provision on the privacy benefits of using CBDC. We find that both factors significantly increase participants' willingness to use CBDC by up to 60% when purchasing privacy-sensitive products. Our findings provide useful insights regarding the design and the public's adoption of CBDC. |
| Keywords: | central bank digital currency (CBDC), privacy, randomized online survey experiment |
| JEL: | E40 E50 C90 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1147&r=ban |
| By: | Adame Espinosa Francisco |
| Abstract: | This work is based on a new Keynesian theoretical model for an advanced economy, which incorporates overlapping generations to analyze a channel through which fluctuations in household financial wealth influence aggregate demand. The optimal monetary policy, corresponding to that of a central planner maximizing households' welfare, aims to mitigate financial fluctuations while simultaneously reducing variability in inflation and the output gap. The model is calibrated for the United States and reproduces the effect of variations in the price of financial assets on aggregate demand. The results show, first, that in the presence of productivity, financial, and demand shocks, optimal monetary policy significantly improves aggregate welfare by stabilizing financial fluctuations that impact households' wealth. Secondly, in the face of productivity and financial shocks, an augmented monetary rule responding explicitly to fluctuations in the price of financial assets, in addition to inflation and output gaps, can reproduce the welfare achieved under optimal monetary policy. However, this is not the case for demand shocks. |
| Keywords: | Monetary Policy;Monetary Rules;Overlapping Generations |
| JEL: | E21 E44 E52 E58 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2023-14&r=ban |
| By: | Peter Anagnostakos; Jason Bram; Benjamin Chan; Natalia Fischl-Lanzoni; Hasan Latif; James M. Mahoney; Donald P. Morgan; Ladd Morgan; Ivelisse Suarez |
| Abstract: | The impacts of hurricanes analyzed in the previous post in this series may be far-reaching in the Second District. In a new Staff Report, we study how banks in Puerto Rico fared after Hurricane Maria struck the island on September 17, 2017. Maria makes a worst case in some respects because the economy and banks there were vulnerable beforehand, and because Maria struck just two weeks after Hurricane Irma flooded the island. Despite the immense destruction and disruption Maria caused, we find that the island’s economy and banks recovered surprisingly quickly. We discuss the various protections—including homeowners’ insurance, federal aid, and mortgage guarantees—that helped buttress the island’s economy and banks. |
| Keywords: | climate; banks; hurricanes; Hurricane Maria; Puerto Rico |
| JEL: | G2 Q54 |
| Date: | 2023–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97345&r=ban |
| By: | Zhiyu Cao; Zachary Feinstein |
| Abstract: | Price-mediated contagion occurs when a positive feedback loop develops following a drop in asset prices which forces banks and other financial institutions to sell their holdings. Prior studies of such events fix the level of market liquidity without regards to the level of stress applied to the system. This paper introduces a framework to understand price-mediated contagion in a system where the capacity of the market to absorb liquidated assets is determined endogenously. In doing so, we construct a joint clearing system in interbank payments, asset prices, and market liquidity. We establish mild assumptions which guarantee the existence of greatest and least clearing solutions. We conclude with detailed numerical case studies which demonstrate the, potentially severe, repercussions of endogenizing the market liquidity on system risk. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.05977&r=ban |
| By: | Carlos Canizares Martinez (National Bank of Slovakia) |
| Abstract: | This study aims to empirically identify the state of the US housing market and establish a countercyclical state-dependent macroprudential policy rule. I do so by estimating a Markov switching model of housing prices, in which mortgage debt affects house prices nonlinearly and drives state transition probabilities. Second, I propose a state-contingent policy rule fed with the probability of being in each state, which I apply to setting a housing countercyclical capital buffer, a mortgage interest deduction, and a dividend payout restriction. Finally, I show that such hypothetical tools contain early warning information in a forecasting exercise to predict the charge-off rates of real estate residential loans and a financial stress index. The significance of this study is that it informs policymakers about the state of the housing market mechanically, while also providing a general rule to implement a state-contingent and timely macroprudential policy. We propose a new method of dealing with the end point problem when filtering economic time series. The main idea is to replace filtered quarterly observations at the end of the sample with static forecasts from a MIDAS regression using higher frequency time series. This method is capable to improve stability of output gap estimates or other cyclical series, as we confirm by empirical analysis on selected CEE countries and the United States. We find that stability may still be violated due to structural breaks in business cycles, or by an excessive amount of short-term noise. While MIDAS regressions have the potential to improve output gap estimates compared to the HP filter approach, the country-specific circumstances play a considerable role and need to be considered. |
| JEL: | C22 C24 G51 R21 R31 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:svk:wpaper:1101&r=ban |
| By: | James Mitchell; Saeed Zaman |
| Abstract: | This paper examines the predictive relationship between the distribution of realized inflation in the US and measures of inflation expectations from households, firms, financial markets, and professional forecasters. To allow for nonlinearities in the predictive relationship we use quantile regression methods. We find that the ability of households to predict future inflation, relative to that of professionals, firms, and the market, increases with inflation. While professional forecasters are more accurate in the middle of the inflation density, households’ expectations are more useful in the upper tail. The predictive ability of measures of inflation expectations is greatest when combined. We show that it is helpful to let the combination weights on different agents’ expectations of inflation vary by quantile when assessing inflationary pressures probabilistically. |
| Keywords: | inflation expectations measures; inflation; density forecasts; quantile predictive regressions; non-Gaussian models; nonlinearities |
| JEL: | C15 C53 E3 E37 |
| Date: | 2023–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:97395&r=ban |
| By: | Ichiro Iwasaki; Evžen Kočenda; Evžen Kocenda |
| Abstract: | We analyze diverse and heterogenous literature to grasp the general effect size of financial development on economic growth on a world scale. For that, we perform by far the largest available meta-analysis of the finance–growth nexus using 3561 estimates collected from 177 studies. Our meta-synthesis results show that large heterogeneity in empirical evidence is, in fact, driven by only a limited number of variables (moderators). By using advanced techniques, we also document the existence of the publication selection bias that is propagated in the literature in a nonlinear fashion. We account for uncertainty in moderator selection by employing model-averaging techniques. After adjusting for the publication bias, the results of our meta-regression provide evidence of a small but genuine positive effect of the financial development on growth that very mildly declines over time. Finance channeled via capital markets seems to be more beneficial for economic growth than that provided in the form of private credit. Our evidence goes against arguments about the damaging role of financial development and is in line with century-old theoretical foundations that favor the positive role of finance on economic growth. |
| Keywords: | financial development, economic growth, meta-analysis, publication selection bias |
| JEL: | C12 D22 G21 G33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10740&r=ban |
| By: | Richard K. Crump; Marco Del Negro; Keshav Dogra; Pranay Gundam; Donggyu Lee; Ramya Nallamotu; Brian Pacula |
| Abstract: | This post uses the New York Fed DSGE model to ask the question: What would have happened to interest rates, output, and inflation had the Federal Reserve been following an average inflation targeting (AIT)-type reaction function since 2021:Q2, when inflation began to rise—as opposed to keeping the federal funds rate at the zero lower bound (ZLB) until March 2022, and then raising it aggressively thereafter? We show that actual policy was more accommodative in 2021 than implied by the AIT reaction function and then more contractionary in 2022 and beyond. On net, the lagged effect of monetary policy on the level of GDP, when measured relative to the counterfactual, has been positive throughout the forecast horizon, due to the initial boost associated with keeping the fed funds rate near zero in 2021. |
| Keywords: | Dynamic Stochastic General Equilibrium (DSGE) models; DSGE; lagged effects; forecasting; monetary policy; New York Fed |
| JEL: | E52 |
| Date: | 2023–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97347&r=ban |
| By: | IWASAKI, Ichiro; ONO, Shigeki |
| Abstract: | We investigate whether the impacts of financial development and liberalization on economic growth vary across different stages of development, which remains unaddressed in the literature on the finance–growth nexus. In the analysis, a comparative meta-analysis was performed for studies of advanced, developing, and emerging market economies, using 6, 135 estimates extracted from a total of 379 previous works. The results have significant implications for studies of the finance–growth nexus. In particular, the impacts of financial development and liberalization on economic growth do not vary across different stages of development. |
| Keywords: | economic development, finance–growth nexus, meta-synthesis, meta-regression analysis, publication selection bias |
| JEL: | E44 G10 O11 O16 P43 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2023-06&r=ban |
| By: | Darren Aiello; Scott R. Baker; Tetyana Balyuk; Marco Di Maggio; Mark J. Johnson; Jason D. Kotter |
| Abstract: | We provide a first look into the drivers of household cryptocurrency investing. Analyzing consumer transaction data for millions of U.S. households, we find that, except for high income early adopters, cryptocurrency investors resemble the general population. These investors span all income levels, with most dollars coming from high-income individuals, similar to equity investors. High past crypto returns and personal income shocks lead to increased cryptocurrency investments. Higher household-level inflation expectations also correlate with greater crypto investments, aligning with hedging motives. For most U.S. households, cryptocurrencies are treated like traditional assets. |
| JEL: | E31 E42 G11 G23 G51 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31856&r=ban |
| By: | Richard K. Crump; Marco Del Negro; Keshav Dogra; Pranay Gundam; Donggyu Lee; Ramya Nallamotu; Brian Pacula |
| Abstract: | Over the last few years, the U.S. economy has experienced unusually high inflation and an unprecedented pace of monetary policy tightening. While inflation has fallen recently, it remains above target, and the economy continues to expand at a robust pace. Does the resilience of the U.S. economy imply that monetary policy has been ineffectual? Or does it reflect that policy acts with “long and variable lags” and so we haven’t yet observed the full effect of the monetary tightening that has already taken place? Using a Bayesian vector autoregressive (BVAR) model, we show that economic activity has, indeed, been substantially stronger than would have been anticipated considering the rapid policy tightening. Still, the model expects a significant slowdown in 2024-25, even though short-term interest rates are forecasted to fall. |
| Keywords: | forecasts; lagged effects; monetary policy |
| JEL: | E2 E52 |
| Date: | 2023–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97346&r=ban |
| By: | Ixandra Achitouv; Dragos Gorduza; Antoine Jacquier |
| Abstract: | This article provides an understanding of Natural Language Processing techniques in the framework of financial regulation, more specifically in order to perform semantic matching search between rules and policy when no dataset is available for supervised learning. We outline how to outperform simple pre-trained sentences-transformer models using freely available resources and explain the mathematical concepts behind the key building blocks of Natural Language Processing. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.08533&r=ban |
| By: | Mohammadreza Mahmoudi |
| Abstract: | This study investigates the influence of monetary policy and monetary policy uncertainties on Bitcoin returns, utilizing monthly data of BTC, and MPU from July 2010 to August 2023, and employing the Markov Switching Means VAR (MSM-VAR) method. The findings reveal that Bitcoin returns can be categorized into two distinct regimes: 1) regime 1 with low volatility, and 2) regime 2 with high volatility. In both regimes, an increase in MPU leads to a decline in Bitcoin returns: -0.028 in regime 1 and -0.44 in regime 2. This indicates that monetary policy uncertainty exerts a negative influence on Bitcoin returns during both downturns and upswings. Furthermore, the study explores Bitcoin's sensitivity to Federal Open Market Committee (FOMC) decisions. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.10739&r=ban |
| By: | Abel Sancarlos; Edgar Bahilo; Pablo Mozo; Lukas Norman; Obaid Ur Rehma; Mihails Anufrijevs |
| Abstract: | The European debt purchase market as measured by the total book value of purchased debt approached 25bn euros in 2020 and it was growing at double-digit rates. This is an example of how big the debt collection and debt purchase industry has grown and the important impact it has in the financial sector. However, in order to ensure an adequate return during the debt collection process, a good estimation of the propensity to pay and/or the expected cashflow is crucial. These estimations can be employed, for instance, to create different strategies during the amicable collection to maximize quality standards and revenues. And not only that, but also to prioritize the cases in which a legal process is necessary when debtors are unreachable for an amicable negotiation. This work offers a solution for these estimations. Specifically, a new machine learning modelling pipeline is presented showing how outperforms current strategies employed in the sector. The solution contains a pre-processing pipeline and a model selector based on the best model calibration. Performance is validated with real historical data of the debt industry. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.06292&r=ban |
| By: | Koch, Svea; Aleksandrova, Mariya |
| Abstract: | With the first Global Stocktake to be presented at the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) in Dubai, the question of inadequate levels of climate finance for developing countries will again take centre stage. Ongoing efforts to reform climate finance include the negotiation of a New Collective Quantified Goal (NCQG) by the end of 2024; the structural reform of Multilateral Development Banks (MDBs) to provide more climate finance and to lower the cost of capital; and the setting-up and integration of the new funding stream for loss and damage. Yet, there are other longstanding issues in international climate finance that likewise need to be addressed as part of these ongoing efforts, which are mainly related to the disentanglement of the development and climate finance regimes. Official Development Assistance (ODA), per definition, aims to promote the economic development and welfare of developing countries, and at the same time plays an increasing role in the global climate finance landscape. However, sourcing climate finance from ODA is already leading to a 'crowding out' of limited ODA resources for its original purposes. Moreover, the current system of reporting on and accounting for climate finance provided through ODA has significant pitfalls and weaknesses. This paper discusses some of the key challenges caused by the blurring of the development assistance and climate finance regimes and argues that the NCQG process and the integration of loss and damage into the climate finance system must go hand in hand with a separation of climate and development finance accounting mechanisms whilst ensuring integrated policy responses. We address these issues in two parts: first we focus on the current system of reporting and accounting for international climate finance (as ODA); and second on the role of ODA to finance mitigation, adaptation, and loss and damage. We argue that there is a political necessity for distinguishing between ODA and climate finance (for transparency and credibility), which contrasts with the operational reality where co-benefits of projects and development finance must be achieved by integrating climate and non-climate objectives. In this regard, the paper analyses the implications of on-going negotiations under the UNFCCC around the NCQG and loss and damage for a necessary ODA reform. In particular, we make the following recommendations: (1) Align the accounting and reporting system of the OECD (Organisation for Economic Co-operation and Development) with the NCQG: one should separate climate and development finance; reduce over-reporting; and establish triangulation of climate finance data reported by donors. (2) Introduce qualitative frameworks for monitoring and assessment of the impact of climate-related interventions; and define 'fit-for-purpose' instru-ments and channels for the provision of climate finance. Looking ahead, we expect discussions on a potential enlargement of the contributor base of climate finance to give new impetus to climate finance reform. |
| Keywords: | development finance, climate change |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:idospb:279953&r=ban |
| By: | Besley, Timothy (London School of Economics); Fetzer, Thiemo (Warwick University and University of Bonn); Mueller, Hannes (IAE (CSIC) and the Barcelona GSE) |
| Abstract: | This paper estimates the size of the media multiplier, an easily generalizable model-based measure of how far media coverage magnifies the economic response to shocks. We combine monthly aggregated and anonymized credit card activity data from 114 card issuing countries in 5 destination countries with a large corpus of news coverage in issuing countries reporting on violent events in the destinations. To define and quantify the media multiplier we estimate a model in which latent beliefs, shaped by either events or news coverage, drive card activity. According to the model, media coverage can more than triple the economic impact of an event. We document, through our model, that this effect is highly heterogenous and depends on the broader media representation of countries in each others news. We speculate about the role of the media in driving international travel patterns an. |
| Keywords: | media ; economic behavior ; news shocks JEL Codes: O1 ; F5 ; D8 ; F1 ; L8 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1483&r=ban |
| By: | Yongchen Zhao (Department of Economics, Towson University) |
| Abstract: | We examine the uncertainty of household inflation expectations using matched point and density forecasts from the New York Fed’s Survey of Consumer Expectations. We argue that using in- formation from both types of forecasts allows for better estimates of uncertainty. Since the two types of forecasts may be inconsistent, we propose to reconcile them by matching the mean (or the median) of individual density forecasts and the corresponding point forecasts using exponential tilting. The reconciled densities provide uncertainty measures that are strictly consistent with the point forecasts by construction. We compare the uncertainty of inflation expectations derived from the reconciled densities with that derived from the original densities. Our results suggest that, at the micro-level, the uncertainty of consistent forecasts tends to be lower after reconciliation, while that of inconsistent forecasts tends to be higher. Aggregate uncertainty measured by averaging individual uncertainty is likely underestimated when using the survey responses directly, without reconciliation. This study contributes to the literature on the measurement of uncertainty and provides insights into the interplay of matched point and density forecasts in this context. |
| Keywords: | Uncertainty measurement, Exponential tilting, Household survey, Consumer sentiment. |
| JEL: | C53 E31 D12 C83 D84 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2023-09&r=ban |
| By: | Sheng Dai; Natalia Kuosmanen; Timo Kuosmanen; Juuso Liesi\"o |
| Abstract: | Optimal allocation of resources across sub-units in the context of centralized decision-making systems such as bank branches or supermarket chains is a classical application of operations research and management science. In this paper, we develop quantile allocation models to examine how much the output and productivity could potentially increase if the resources were efficiently allocated between units. We increase robustness to random noise and heteroscedasticity by utilizing the local estimation of multiple production functions using convex quantile regression. The quantile allocation models then rely on the estimated shadow prices instead of detailed data of units and allow the entry and exit of units. Our empirical results on Finland's business sector reveal a large potential for productivity gains through better allocation, keeping the current technology and resources fixed. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.06590&r=ban |