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on Central Banking |
| By: | Johanna Tiedemann; Olivier Bizimana; Shant Arzoumanian |
| Abstract: | This paper assesses the stance of monetary policy in eleven Sub-Saharan African (SSA) emerging and frontier market economies. We estimate neutral real interest rates using a range of methodologies, and find a broadly declining trend in most economies since the Global Financial Crisis, consistent with patterns observed in advanced and major emerging market economies. We document significant heterogeneity in monetary policy stances—measured by the interest rate gap—even during common global shocks. We also examine the consistency between signals from the intended monetary policy stance and broader financial conditions. To this end, we construct financial conditions indices (FCIs) and analyze their relationship with interest rate gaps. We find that this relationship strengthens during periods of highly accommodative or restrictive monetary stances, particularly in economies that have adopted or are transitioning to inflation-targeting frameworks. Moreover, contractionary monetary shocks tighten financial conditions more in these economies than in those operating under other regimes. |
| Keywords: | Neutral Interest Rate; Monetary Policy Stance; Financial Conditions; Monetary Policy Transmission; SSA |
| Date: | 2025–08–15 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/160 |
| By: | Albertazzi, Ugo; Ferrando, Annalisa; Gori, Sofia; Rariga, Judit |
| Abstract: | This paper explores empirically the cost channel of monetary policy transmission during the recent period of monetary policy tightening in the euro area. We combine unique data on firms’ selling price expectation from the Survey on the access to finance of enterprises (SAFE), information on firms’ borrowing from the euro area-wide credit register (AnaCredit) and ECB monetary policy surprises. Firms revise upwards their one-year-ahead selling price expectations following monetary announcements in a tightening cycle and this effect increases in firms’ working capital exposure. The paper provides supportive evidence on the existence of a cost channel of monetary policy, adding to our understanding of monetary policy transmission to firms in the euro area. JEL Classification: G30, E52, D84 |
| Keywords: | firm financing, monetary policy, selling price expectations |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253097 |
| By: | Paige Ehresmann; Juan M. Morelli; Jessie Jiaxu Wang |
| Abstract: | In this note, we build on the factor-based asset pricing framework introduced in our companion piece, "Modeling Bank Stock Returns: A Factor-Based Approach" (Ehresmann, Morelli, and Wang, 2025), to examine the transmission of monetary policy (MP) shocks through bank stock returns. Specifically, we explore two core questions. |
| Date: | 2025–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:2025-08-04 |
| By: | Sharjil M. Haque; Young Soo Jang; Jessie Jiaxu Wang |
| Abstract: | This paper examines how banks’ financing of nonbank lenders affects monetary policy transmission. Using supervisory bank loan-level data and deal-level private credit data, we document an intermediation chain: Banks lend to Business Development Companies (BDCs)—large private credit providers—which then lend to firms. As monetary tightening restricts bank lending, firms turn to BDCs for credit, prompting BDCs to borrow more from banks. This intermediation chain raises borrowing costs, as banks charge BDCs higher rates, which BDCs pass on to firms. Consistent with this pass-through, bank-reliant BDCs respond more strongly to monetary tightening, and BDC-dependent firms grow more but exhibit weaker interest coverage ratios. Overall, while bank lending to nonbanks mitigates credit contraction and supports investment during tightening, it amplifies monetary transmission by elevating borrowing costs and financial distress risk. |
| Keywords: | Banks and nonbanks; Monetary policy transmission; Business development companies (BDCs); Private credit; Credit chain |
| Date: | 2025–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-59 |
| By: | López-Noria, Gabriela; Pedemonte, Mathieu |
| Abstract: | We study how monetary policy affects inflation uncertainty. Using a survey of Mexican firms and exploiting quasi-random variation in the response date, we estimate the effect of a monetary policy decision and surprise on firms perceived inflation uncertainty. We find that a one percentage point contractionary monetary policy reduces inflation uncertainty by 0.02 percentage points. We explore how this result is affected by levels of higher and lower aggregate uncertainty. We find that monetary policy tightening is twice as effective in reducing inflation uncertainty in periods of higher economic uncertainty, such as trade uncertainty. Our findings highlight the role of monetary policy in reducing inflation uncertainty. We discuss that in periods of uncertainty, monetary authorities face a trade-off between stimulating the economy and increasing uncertainty about the inflation outlook. |
| Keywords: | survey data;inflation uncertainty;firms expectations |
| JEL: | E31 E52 D80 D84 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14223 |
| By: | Vihar Dalal; Daniel A. Dias; Pinar Uysal |
| Abstract: | This paper uses a structural vector autoregressive (SVAR) model—identified with an external monetary policy instrument and sign restrictions—to derive a measure of bank credit conditions from changes in bank lending standards. The model incorporates data on interest rates, bank credit, and survey-based measures of bank lending standards to identify monetary policy, credit demand, and credit supply shocks. Using these identified shocks, we construct a novel measure of bank credit conditions that corresponds to the component of credit growth that would occur if credit demand remained unchanged, reflecting solely the impacts of monetary policy and credit supply shocks. Using this measure, we find that credit supply–driven changes in bank credit conditions have a stronger impact on real outcomes in the euro area, whereas monetary policy–driven changes play a larger role in the U.S. economy. |
| Keywords: | Bank Credit; Bank Lending Surveys; Monetary Policy; External Instruments; Sign Restrictions; SVAR |
| JEL: | C32 C36 G21 |
| Date: | 2025–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-55 |
| By: | Iustina Alina Boitan (Bucharest University of Economic Studies); Thomas Paulovici (Bucharest University of Economic Studies, Doctoral School of Finance) |
| Abstract: | The paper investigates the potential of Central Bank Digital Currencies (CBDCs) to enhance financial inclusion by improving access to digital financial services for unbanked populations, particularly in developing economies where the issue of financial exclusion and low access to financial services is endemic. Our analytical interest substantiates inthe growing interest exhibited by central banks and international financial institutions regarding the emergence of this new type of state-backed digital currency. CBDCs represent digital forms of central bank money that may serve as complement to cash and other payment instruments in a secure, efficient, and accessible payment environment, unlike cryptocurrencies, which operate on decentralized networks. While CBDCs offer promising features such as cost efficiency, security, and accessibility, several challenges, including design deficits, digital and financial literacy barriers, and regulatory considerations must be addressed to ensure their effectiveness. Through a systematic review of existing academic literature, empirical evidence and case studies from some developing or emerging economies, this study examines positive impacts as well as the challenges of these CBDCs in promoting financial inclusion. In particular, it investigates the theoretical mechanisms through which CBDCs could enhance access to financial services, and the challenges that may hinder their effectiveness. Furthermore, the analysis draws on a series of case studies from some of the early CBDC adopters, to identify the real-world impact of CBDCs on financial inclusion. The findings suggest that while CBDCs have the potential to bridge financial gaps, their success depends on strategic design and implementation as well as on complementary policies. The paper further discusses policy recommendations for designing CBDCs that maximize their potential as an inclusion-enhancing tool. |
| Keywords: | Central Bank Digital Currencies, Central Banks, Financial Inclusion, Digital Payments, Developing Economies, eNaira, Sand Dollar |
| JEL: | E50 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:15116731 |
| By: | Djeneba Dramé (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre); Florian Léon (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne) |
| Abstract: | This paper examines how firms in developing countries respond to monetary policy changes, focusing on both their perceptions of credit constraints and their borrowing behavior. Using firm-level data from the World Bank Enterprise Surveys (WBES) and a newly constructed database of monetary policy changes, we employ an event study approach to analyze how managers adjust their expectations of credit access in the days following a policy intervention. We complement this with a broader analysis of how annual policy rate changes affect firms' credit applications. Our results show that firms perceive credit access as more restrictive after a policy rate hike, but do not significantly reduce their credit applications. Instead, credit demand increases after a rate cut, highlighting an asymmetric response to monetary policy. We also find substantial heterogeneity, with firms' sensitivity depending not only on their proximity to banks, but also on the degree of liquidity of the banking market and the degree of independence of the central bank. These results provide new insights into the transmission of monetary policy in developing countries. |
| Keywords: | JEL classification: D4 E52 G32 L1 O16 Monetary policy Financial constraints Firms Developing countries |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05172185 |
| By: | Jonathan Benchimol; Inon Gamrasni; Michael Kahn; Sigal Ribon; Yossi Saadon; Noam Ben-Ze'ev; Asaf Segal; Yitzchak Shizgal |
| Abstract: | The global financial crisis (GFC) triggered the use of macroprudential policies imposed on the banking sector. Using bank-level panel data for Israel for the period 2004-2019, we find that domestic macroprudential measures changed the composition of bank credit growth but did not affect the total credit growth rate. Specifically, we show that macroprudential measures targeted at the housing sector moderated housing credit growth but tended to increase business credit growth. We also find that accommodative monetary policy surprises tended to increase bank credit growth before the GFC. We show that accommodative monetary policy surprises increased consumer credit when interacting with macroprudential policies targeting the housing market. Accommodative monetary policy interacted with nonhousing macroprudential measures to increase total credit. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.07082 |
| By: | Guangling Liu; Christopher D. Solomon |
| Abstract: | Conventional macroeconomics has viewed inflation as a monetary phenomenon through the Quantity Theory of Money. Ever-increasing sovereign debt globally has caused concern among economists. These concerns follow not from the ability of governments to repay their debt, but rather from the impact of sizeable debt portfolios on price levels. The Fiscal Theory of the Price Level epitomizes these concerns, contrasting the traditional view on inflation by arguing that it is a fiscal phenomenon caused by debt issuance without real backing. |
| Keywords: | Monetary and fiscal policy, Inflation, Sovereign debt, Macroeconomics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-52 |
| By: | Emanuel Moench; Robin Schaal |
| Abstract: | This paper examines the impact of extreme weather events on the term structure of sovereign bond yields in a global panel. Using local projections to estimate the dynamic response of yields and their expected short rate and term premium components to such events, we uncover significant heterogeneity across countries. We show that differentiating between strong and weak fiscal regimes helps explain variations in both yield and inflation responses. Among advanced economies, countries with low debt levels experience a significant rise in short rate expectations as investors anticipate tighter monetary policy in response to inflationary pressures. Advanced economies with high levels of debt primarily exhibit a rise in term premiums, consistent with investors pricing in more issuance. While fiscally constrained emerging economies exhibit muted yield responses, their higher-rated peers experience a decline in expected short rates and an increase in term premiums, potentially suggesting that investors anticipate monetary easing and increased debt issuance following disasters. |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:rbz:wpaper:11088 |
| By: | Admire Tarisirayi Chirume; James Hurungo; Brandon Aaron Chinoperekweyi |
| Abstract: | This study explores the effects of climate shocks on South Africas macroeconomic stability and monetary policy dynamics through a simulation-based dynamic stochastic general equilibrium model. It incorporates climate variability as a key factor influencing inflation expectations, output and other macroeconomic variables. The paper examines how climate-induced disruptions such as changes in agricultural productivity, natural disasters and environmental conditions affect inflation, employment, exchange rates and interest rates over a 50-year horizon (20252075). The findings reveal that climate variability significantly affects inflation expectations and economic output, necessitating adaptive monetary policies that incorporate climate risks. The study underscores the importance of integrating climate considerations into macroeconomic frameworks to enhance the resilience of South Africas economy, emphasising policy measures such as interest rate adjustments, climate-informed inflation targeting and long-term strategic planning to mitigate climate-related economic disruptions. |
| Date: | 2025–08–21 |
| URL: | https://d.repec.org/n?u=RePEc:rbz:wpaper:11087 |
| By: | Samin Abdullah; Manjola Tase |
| Abstract: | We find that an increase in policy rate uncertainty is associated with an increase in MMF portfolio allocations towards assets with shorter-dated maturities. We also find that the direction of uncertainty matters: MMF portfolio maturity is more sensitive to uncertainty when it relates to changes in expectations for a larger increase or a smaller decrease in the policy rate than when it relates to changes in expectations for a smaller increase or a larger decrease in the policy rate. Furthermore, for MMF that are eligible to participate at the Federal Reserve's Overnight Reverse Repurchase Agreement (ON RRP) facility, we find that when policy rate uncertainty increases, MMF adjust their portfolio composition by increasing their take-up at the facility. This suggests that the ON RRP facility helps smooth fluctuations in short-term funding markets. |
| Keywords: | Money market funds; Portfolio allocations; Monetary policy expectations; Uncertainty; Federal Reserve; ON RRP |
| JEL: | G11 G23 E52 |
| Date: | 2025–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-63 |
| By: | Philippe Bacchetta (University of Lausanne; Centre for Economic Policy Research (CEPR); Swiss Finance Institute); J. Scott Davis (Federal Reserve Banks - Federal Reserve Bank of Dallas); Eric van Wincoop (University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)) |
| Abstract: | Global non-US banks have significant dollar exposure both on and off their balance sheet. We develop a model to analyze their adjustment to dollar funding shocks, whether from reduced direct lending or external dollar shortages. The model provides insight into banks' responses through borrowing, lending, and FX swap positions, as well as the impact on their net worth, their probability of default and CIP deviations. Implications of the model are confronted with data on the response of non-US global banks to major dollar funding shocks. We examine the benefits from buffering these shocks through central bank dollar swap lines or local currency lending by the central bank. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2565 |
| By: | Enzinger, Matthias (The Vienna Institute for International Economic Studies); Gechert, Sebastian (Chemnitz University of Technology); Heimberger, Philipp; Prante, Franz; Romero, Daniel Fernández |
| Abstract: | We build a dataset of output and price effects of conventional monetary policy containing 146, 463 point estimates and confidence bands from 4, 871 impulse-response functions in 409 primary studies. Simple average responses suggest that interest rate hikes substantially dampen output and prices. However, we find robust evidence for publication bias. Bias corrections reduce effect sizes by half or more: in response to a 100 basis points rate hike, output and prices are unlikely to fall by more than 0.5 and 0.25 percent, respectively. Shock identification choices and publication characteristics correlate with effect sizes but are quantitatively less important than publication bias. |
| Date: | 2025–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:72cen_v2 |
| By: | Theodore Kapopoulos (Athens University of Economics and Business - Department of Accounting and Finance); Dimitrios Anastasiou (Athens University of Economics and Business - Department of Business Administration); Steven Ongena (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Athanasios Sakkas (Athens University of Economics and Business - Department of Accounting and Finance) |
| Abstract: | We investigate the relationship between global geopolitical risk and bank deposit flows across a wide panel of European countries. Motivated by the pivotal role of deposit stability for financial intermediation and systemic resilience, we explore whether geopolitical shocks alter depositors' portfolio choices. Using quarterly country-level data and employing the Geopolitical Risk Index (GPR) of Caldara and Iacoviello (2022) along with its sub-indices (GPR Acts and GPR Threats), we document that rising global geopolitical risk significantly increases aggregate bank deposits. Specifically, a one-standard-deviation increase in geopolitical risk is associated with an average rise of €13.3 billion in household deposits and €5.6 billion in corporate deposits, highlighting the sizable financial reallocation triggered by global uncertainty. This positive effect is channelled through a reallocation from riskier assets to deposits, with a stronger reaction observed among households compared to firms. Our findings suggest that bank deposits act as a safe-haven asset in periods of heightened global tensions, complementing the flight-to-safety phenomenon documented in sovereign bond markets. The results have important implications for financial stability analysis, monetary policy transmission and banks' liquidity risk management under geopolitical stress. |
| Keywords: | bank deposit flows, geopolitical risk, financial instability |
| JEL: | G4 G21 F51 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2564 |
| By: | Ece Fisgin; Joaquin Garcia-Cabo; Alex Haag; Mitch Lott |
| Abstract: | We present a principal component analysis of euro area labor market conditions by combining information from 22 labor market indicators into two comprehensive series. These two novel indicators provide a systematic view of the current state and forward-looking direction of the euro-area labor market, respectively, and demonstrate superior forecasting performance compared to existing indicators. Crucially, we find significant implications for monetary policy design: a local projection analysis reveals that ECB monetary policy shocks have attenuated effects on both inflation and unemployment when the labor market forward-looking indicator is high. The dampened inflation response calls for tighter policy rate paths than a standard Taylor rule would prescribe. Finally, we show that focusing solely on the official unemployment rate may understate the actual labor market slack, and consequently, the trade-off between labor market health and inflationary dynamics. |
| Keywords: | Employment; Unemployment; Labor market forecasting; European labor market |
| JEL: | E24 E27 J63 |
| Date: | 2025–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:1415 |
| By: | Cuzzola, Angelo; Barbieri, Claudio; Hałaj, Grzegorz |
| Abstract: | This study investigates the impact of supervisory stress testing on banks’ behaviors and their systemic risk implications. Utilizing confidential supervisory data from the European Banking Authority’s EU-wide stress tests in 2021 and 2023, we employ a difference-in-differences framework to analyze how these exercises influence portfolio management decisions among European banks. This methodology allows us to compare stress-tested banks with similar non-tested institutions before and after the stress test events, isolating the effects specifically associated with the EU-wide assessments. Our findings reveal significant patterns of anticipatory behavior, with banks strategically window-dressing their capital ratios before stress tests begin. This behavior is particularly pronounced among institutions that subsequently receive the lowest scores in terms of capital depletion. We document that these anticipatory adjustments lead to decreased portfolio similarity across banks, an effect that persists after the stress tests and remains consistent across different similarity measures. Importantly, such a decrease in similarity does not spin off into more granular business model or country clusters, thus limiting potential systemic risk through portfolio synchronization. Our results, while considering how financial institutions incorporate stress test considerations into their strategic decision-making, highlight the dual role of stress tests in enhancing individual bank resilience and reducing systemic vulnerabilities. These findings contribute to the ongoing debate on effective banking supervision and the design of regulatory stress testing frameworks. JEL Classification: G21, G28, E58, C23 |
| Keywords: | banking supervision, financial stability, portfolio similarity, stress testing, systemic risk, window-dressing |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253094 |
| By: | Oktay Özden; Alp Erinç Yeldan |
| Abstract: | We present a two-household stock-flow consistent (SFC) model of the UK economy using data from the Office for National Statistics (ONS). The model explores the dynamics of post-COVID inflation with a particular focus on the interplay between inflation and income inequality, drawing on the theoretical framework of income conflict. It comprises six sectors: households (disaggregated into rentiers and workers), non-financial corporations, monetary financial corporations, insurance corporations and pension funds, the government, and the rest of the world. Employing a combination of estimation and calibration techniques, the model replicates key macroeconomic aggregates reported by the ONS between 2020 and 2023. We impose several short-term scenarios on the model to evaluate the model’s capabilities to capture distributive tensions underlying recent inflationary developments. Our results suggest that an orthodox monetary policy intervention by the Bank of England exclusively administered through interest rate management performs poorly in taming inflation and further worsens income inequality. In contrast, an alternative scenario based on progressive incomes policy administered through increased taxation of rentier incomes, rather than any monetary intervention on the interest rate, is found to generate significant improvements in income distribution and a notable reduction in inflation. |
| Keywords: | Stock-Flow Consistent Model, UK economy, post-COVID inflation, income inequality |
| JEL: | E12 E17 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2519 |
| By: | Ferrari Minesso, Massimo; Van Robays, Ine; Cassinis, Maria Giulia |
| Abstract: | We introduce a mixed-frequency model that identifies the impact of supply shocks on inflation in the United States in real time. The model decomposes weekly movements in inflation-linked swap rates—market-based inflation expectations—and isolates three supply shocks: global value chain disruptions, energy supply shocks, and domestic supply constraints, separating them from demand-driven factors. We show how these shocks contributed to a post-Covid feedback loop that intensified inflation. By linking weekly shocks to monthly inflation components up to the industry level, we find that global value chain disruptions generate the most persistent and broad-based price pressures, while energy and domestic supply shocks tend to produce more transitory effects, as their narrower inflationary impact is more easily offset by demand-dampening, contractionary forces. Our model captures these various supply-side dynamics effectively and offers timely insights to support a more responsive monetary policy. JEL Classification: C54, C58, E31, G12, G15 |
| Keywords: | inflation, mixed-frequency VAR, supply shocks |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253096 |
| By: | Pierre L Siklos; Dora Xia; Hongyi Chen |
| Abstract: | This paper provides new estimates of the neutral interest rate, or r*, with a frequency domain approach using quarterly data from China, Japan, Korea, and the US. Utilizing band spectrum regressions, we estimate two types of neutral rates, which hold over the business cycle and the financial cycle respectively. To account for uncertainty around estimates of r*, we derive confidence bands via a thick modelling approach. Our estimates share a few common features with existing published estimates. Consistent with prior research, a downward trend in r* is observed, although the trend becomes less obvious when uncertainty bands are factored in. Meanwhile, our findings offer novel perspectives on the neutral rate in the four countries examined. For individual countries, our estimates for the two types of r* do not always track each other, suggesting that central banks face trade-off between business versus financial cycle considerations when setting the policy rate. Across countries, we identify significant positive spillovers from the US to the three East Asia countries, as well as spillovers from China to Kora and Japan. |
| Keywords: | China, Japan, Korea, neutral real rate, time series and frequency domain modeling, band spectrum regression, financial cycle |
| JEL: | E58 E32 E42 E43 C54 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1285 |
| By: | Hie Joo Ahn; Yunjong Eo |
| Abstract: | This paper empirically investigates sources of hysteresis, focusing on downward nominal wage rigidity and the gender gap in the labor market, using U.S. state-level payroll employment data. Employing a Bayesian Markov-switching model of business cycles, we identify U-shaped and L-shaped recessions, which correspond to quick recoveries and hysteresis, respectively. Both U-shaped and L-shaped recessions are driven by supply and demand shocks; however, U-shaped recessions are associated with recessionary shocks that raise labor productivity, whereas L-shaped recessions are also driven by shocks that reduce labor productivity. Following L-shaped recessions, recoveries in employment, output, and labor productivity are sluggish and accompanied by declining inflation. In contrast, U-shaped recoveries feature stronger rebounds without significant changes in inflation. Greater downward nominal wage rigidity and a larger gender employment gap both increase the likelihood of L-shaped recessions and hysteresis. Downward nominal wage rigidity enhances the effectiveness of both expansionary monetary and tax policies. While expansionary monetary policy becomes more effective with a larger gender gap, the effectiveness of tax cuts remains unaffected. |
| Keywords: | Hysteresis; Regional business cycles; L-shaped recession; U-shaped recession; Wage rigidity; Gender employment gap; Monetary policy; Fiscal policy |
| JEL: | C22 C51 E32 E37 |
| Date: | 2025–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-62 |
| By: | Mark A. Carlson |
| Abstract: | There was a banking panic in New Mexico in early 1924 when about one-fourth of the banks in the state closed temporarily or permanently amid widespread runs. The Federal Reserve used both high profile and behind the scenes operations to calm the panic. This paper provides a history of this episode and explores how conspicuous and inconspicuous aspects of the Federal Reserve’s response interacted to bolster confidence in the banking system. |
| Keywords: | Banking Panic; New Mexico; Federal Reserve; Lender of Last Resort |
| JEL: | G01 N21 |
| Date: | 2025–08–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-64 |