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on Central Banking |
| By: | Joseph Kopecky (Department of Economics, Trinity College Dublin); Giacomo Mangiante (Bank of Italy) |
| Abstract: | How does the population age structure affect monetary policy? With advanced economies experiencing increased inflation risk and sluggish growth, it is more important than ever to understand how the monetary toolbox transmits to the outcomes that policymakers wish to affect. Studying a long run panel of countries, we identify the impact of changing population age structures on the effectiveness of monetary policy transmission to the economy. These shocks are identified using a recently proposed trilemma instrument for quasi-exogenous change in policy rates. On the one hand, we provide strong empirical evidence for a relationship between age structure and the transmission of interest rate shocks to CPI inflation, with young populations reducing this transmission, middle-aged ones reinforcing it, and older retirees strongly reducing it again. We observe the same pattern for nominal wages and real house prices. On the other hand, population aging is found to have transitory effects on the responsiveness of real aggregate variables such as, output, consumption, and investment with older populations delaying the impact of monetary policy. We find no impact on transmission to unemployment. These results have potentially important implications for the conduct of policy, particularly in the current environment where central bankers must frequently choose between their inflation and full employment targets. |
| Keywords: | Monetary Policy Transmission; Demographic Change |
| JEL: | E50 E52 J11 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1725 |
| By: | Tudor Schlanger (Yale School of Management); Lena Suchanek (Bank of Canada); Jonathan Swarbrick (University of St Andrews); Joel Wagner (Bank of Canada); Yang Zhang (Bank of Canada) |
| Abstract: | We study the role of unconventional monetary policies during a pandemic, focusing on the implementation sequencing of policies when there is a social containment period. Using the Bank of Canada's main projection model (ToTEM), we compare the efficacy of a suite of extended monetary policies (EMPs), finding that the immediate implementation of forward guidance and quantitative easing, followed by credit easing when containment measures are lifted delivers the best outcome. We also quantify the fiscal response needed to offset the gap in gross domestic product created by the effective lower bound, given operational limitations in scaling up EMPs. |
| Keywords: | COVID-19; pandemic; monetary policy; monetary policy sequencing; quantitative easing; credit easing |
| JEL: | E3 E4 E5 E52 E58 |
| Date: | 2025–06–19 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2501 |
| By: | Dirk Niepelt |
| Abstract: | We review the macroeconomic literature on retail central bank digital currency (CBDC), organizing the discussion around a CBDC-irrelevance result. We identify both fundamental and policy-related sources of relevance, or departures from neutrality. Bank disintermediation - the crowding out of deposits - does not, by itself, constitute such a source. We argue that the literature has primarily focused on policy-related sources of non-neutrality, often without making this focus explicit. From a macroeconomic perspective, CBDC is, at its core, a matter of monetary architecture, and political economy considerations are central to understanding CBDC policy design. |
| Keywords: | Monetary architecture, central bank digital currency, public money, private money, neutrality, lender of last resort. |
| JEL: | E42 E51 G21 G28 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:ube:dpvwib:dp2509 |
| By: | Shigenori Shiratsuka (Faculty of Economics, Keio University) |
| Abstract: | An exit strategy from large-scale unconventional monetary policy requires central banks to adjust their policy interest rates and the size of their balance sheet. Adjustments of policy interest rates are carried out using neutral interest rates as a guidepost, even in the presence of measurement uncertainty. In contrast, adjustments of balance sheet size, or quantitative tightening (QT), are implemented through trial and error without any standardized guideposts. In this paper, I will develop a guidepost for the QT process in Japan. To that end, I will examine the long-term level of the balance sheet size of the Bank of Japan (BOJ), based on the estimation results for the nonlinear shape of the reserve demand curve. I will then carry out a simulation analysis of the transition path of the BOJ's holdings of Japanese Government Bonds (JGBs). I will also address concerns over the boundary between fiscal financing and monetary policy by proposing the "extended banknote rules, " both in the long term and in the transition. |
| Keywords: | Central bank balance sheet, New conventional monetary policy, Liquidity effects, Quantitative tightening, Extended banknote rule |
| JEL: | E44 E52 E58 G21 |
| Date: | 2025–10–26 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2025-023 |
| By: | Patrick A. Imam; Mr. Tigran Poghosyan |
| Abstract: | This paper examines the effectiveness of inflation targeting (IT) frameworks during the global inflation surge of 2022, a shock primarily driven by large adverse supply side disruptions following the onset of the War in Ukraine. The empirical findings suggest that (de jure) IT frameworks did not systematically deliver better inflation outcomes during this episode. The decline in inflation back towards historical norms was broadly comparable across (de jure) IT and non-IT country groups. While (de jure) IT central banks hiked their policy rates by more than non-IT central banks on average, this did not help with achieving better inflation outcomes. Also, we find no evidence of a more flexible exchange rate after the shock in (de jure) IT central banks. These findings suggest that (de jure) IT does not necessarily imply an advantage for monetary policy, particularly in the face of large, global supply shocks. Further analysis is warranted on how monetary policy frameworks can adapt to an environment characterized by more frequent and persistent supply-side disruptions. While using a de facto classification of IT regimes would be preferable, the absence of a comprehensive database makes this infeasible. |
| Keywords: | Inflation Targeting; Central Bank Credibility; Supply Shocks |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/212 |
| By: | SUI, Qing-yuan |
| Abstract: | We empirically investigate the impact of the Bank of Japan’s (BOJ) monetary policy on the lending behaviors of regional banks during the period of quantitative easing (QE). We focus particularly on the credit supply from banks to different industries or sectors, with an emphasis on manufacturing and real estate-related industries. Our results indicate that the BOJ’s QE policy promoted bank lending to the estate-related industries or sectors but not to the manufacturing industry. Our findings align with recent studies on the limitations of overall credit supply in influencing the business cycle and economic growth. Furthermore, Our results suggest that the BOJ has limited ability to halt the recession through lending channels under the QE policy. |
| Keywords: | quantitative easing, bank lending, regional banks, excess reserve, dynamic panel model |
| JEL: | E44 E52 E58 G21 |
| Date: | 2025–08–24 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-144 |
| By: | HASUI, Kohei; TERANISHI, Yuki |
| Abstract: | This paper evaluates whether the Bank of Japan (BOJ)’s “Inflation-Overshooting Commitment” can work to raise inflation rates by over 2 percent to end the zero interest rate policy or whether cost-push shocks luckily give a chance of high inflation rates for the BOJ to escape a liquidity trap. We show that the Taylor-type rule can not replicate inflation overshooting, even though the zero interest rate policy continues as the BOJ’s monetary policy. However, the Taylor-type rule achieves about a 2 percent target in the end, and the cost-push shocks work as good luck to induce high inflation data and justify the escape from a liquidity trap. In the case of the price-level targeting policy, inflation rates increase by more than 2 percent, and the zero interest rate policy continues even after inflation rates sufficiently exceed 2 percent. Under the price-level targeting policy, the cost-push shocks give little good luck in terminating the zero interest rate policy earlier. Our simulation results imply that the BOJ successfully excludes the effect of positive cost-push shocks to implement the exit policy and conducts the history-dependent policy under inflation-overshooting commitment. Our results do not change for a variety of Japanese parameters for the anchored level of inflation rate, elasticity of demand to real interest rate, and inflation persistence. Moreover, the augmented Taylor-type rule with a strong history dependence can work as a price-level targeting policy. |
| Keywords: | monetary policy, commitment, liquidity trap |
| JEL: | E31 E52 E58 E61 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-149 |
| By: | Kaldorf, Matthias |
| Abstract: | We propose a quantitative DSGE model with environmental and financial frictions to asses how high emission taxes affect optimal central bank collateral policy. Central banks specify which assets banks can pledge as collateral to obtain short-term central bank funding. This is referred to as central bank collateral policy and involves a trade-off between supplying sufficient liquidity to banks and exposing itself to losses from accepting risky assets as collat- eral. Emission taxes affect this trade-off by reducing productivity in the non-financial sector, such that the corporate default rate increases and the quality of collateral deteriorates. High emission taxes also reduce investment, debt issuance and, hence, the amount of collateral available to banks. This decline in the quantity of collateral is more pronounced if emission tax shocks are very persistent or permanent. It is therefore optimal to relax collateral policy in the longer run, where the collateral quantity channel dominates, and to tighten collateral policy after a transitory emission tax shock, in order to offset the short run reduction in collateral quality. |
| Keywords: | Central Bank Collateral Policy, Climate Policy, Collateral Premia, Corporate Default Risk |
| JEL: | E44 E58 E63 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:330307 |
| By: | Marjorie Pampusa; Ashwin Moheeput; Atish Babboo; Rajlukshmee Tengur; Rideema Cunniah; Sharmeen Gariban; Mr. Iaroslav Miller; Shalva Mkhatrishvili; Valeriu Nalban |
| Abstract: | This paper presents the Mauritius Quarterly Projection Model (QPM), the semi-structural analytical tool that underpins the modernized Forecasting and Policy Analysis System of the Bank of Mauritius (BOM). The model is designed to capture the salient features of the domestic economy, including key monetary policy transmission channels and the recently introduced flexible inflation targeting framework. Relative to canonical QPM structures, it also incorporates a parsimonious fiscal block and a labor market block, providing key insights on broader macroeconomic dynamics and enriching the policy advice. The model optimally balances theoretical consistency—evident in coherent shock propagation and policy responses—and empirical reliability, as reflected in its strong in-sample forecasting performance. The practical use of the Mauritius QPM in the context of the BOM’s regular forecasting cycles for the production of baseline projections, counterfactual simulations and alternative scenarios, together with the corresponding model-based economic narratives, make it a critical component of the BOM’s forward-looking monetary policy formulation. |
| Keywords: | Mauritius; Forecasting and Policy Analysis; Quarterly Projection Model; Monetary Policy; Transmission Mechanism |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/215 |
| By: | McLeay, Michael; Tenreyro, Silvana |
| Abstract: | Has the dominance of the dollar in global trade rendered monetary policy ineffective? An emerging view contends that if a country invoices its exports in dollars, exchange rates cannot stabilize economic activity, as the classical expenditure-switching channel is muted. This view rests on the premise that export prices are sticky in dollars, breaking the link between export demand and depreciations. But this assumption is not borne out by the data: goods priced in dollars tend to have more flexible prices, along with higher elasticities of substitution. We propose a model with more realistic assumptions and show that even with dollar pricing, depreciating the currency by loosening monetary policy can still boost exports and activity materially. The limit to any expansion is not demand, but supply capacity. We also show that low exchange-rate pass-through to dollar prices is not informative about price stickiness. The price response to exchange rates is small when demand elasticities are high, even with flexible prices: low pass-through is an equilibrium result, not evidence of a nominal friction. |
| JEL: | E31 E52 F41 Q30 |
| Date: | 2025–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128085 |
| By: | Emilio Barucci; Andrea Gurgone; Giulia Iori; Michele Azzone |
| Abstract: | We analyse financial stability and welfare impacts associated with the introduction of a Central Bank Digital Currency (CBDC) in a macroeconomic agent-based model. The model considers firms, banks, and households interacting on labour, goods, credit, and interbank markets. Households move their liquidity from deposits to CBDC based on the perceived riskiness of their banks. We find that the introduction of CBDC exacerbates bank-runs and may lead to financial instability phenomena. The effect can be changed by introducing a limit on CBDC holdings. The adoption of CBDC has little effect on macroeconomic variables but the interest rate on loans to firms goes up and credit goes down in a limited way. CBDC leads to a redistribution of wealth from firms and banks to households with a higher bank default rate. CBDC may have negative welfare effects, but a bound on holding enables a welfare improvement. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.21071 |
| By: | Hanin Khawaja (Department of Economics, New School For Social Research, USA) |
| Abstract: | The international monetary system (IMS) has long been interpreted through the lens of singularity, where global stability hinges on a single dominant currency fulfilling all core monetary functions—store of value, medium of exchange, and unit of account. This paper challenges that paradigm by introducing the concept of functional fragmentation. The IMS is evolving toward different currencies increasingly specializing in specific roles, without any single issuer monopolizing the system. The transformation draws on wholesale central bank digital currencies (wCBDCs) and distributed ledger technologies (DLTs), but also reflects deliberate institutional choices shaped by geopolitical tensions and the erosion of trust in dollar-centric infrastructure. The U.S. dollar is likely to maintain its primacy in global reserves, but new platforms are enabling regional currencies to gain ground in payments and settlement. First, emerging markets are building wCBDC-based networks designed to bypass traditional correspondent banking. Second, the European Union is advancing interoperability and financial infrastructure resilience to safeguard the euro’s regional role. Third, the USA and the UK, slower to adopt CBDCs, are leveraging regulatory frameworks around stablecoins to reinforce dollar dominance through fintech intermediaries. The implications for global liquidity, reserve strategies, and financial stability are profound, requiring renewed attention to institutional coordination and systemic design in a modular, post-hegemonic IMS. |
| Keywords: | International Political Economy, international monetary system (IMS), singularity, world money, central bank digital currency (CBDC), functional fragmentation |
| JEL: | E42 F02 F53 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2514 |
| By: | Diana Barro (Ca’ Foscari University of Venice); Antonella Basso (Ca’ Foscari University of Venice); Marco Corazza (Ca’ Foscari University of Venice); Guglielmo Alessandro Visentin (Henley Business School, University of Reading) |
| Abstract: | We propose a hybrid approach that combines Neural Networks with a Vector Autoregression (VAR) model to generate long-term forecasts of time series. We apply this methodology to forecast the impact of shifts in monetary policies within the Euro area on a comprehensive set of macroeconomic variables. Our analysis begins with a standard (linear) VAR model, which is then enhanced by incorporating Neural Networks to generate long-term forecasts for key variables such as the interest rate, inflation, real output, narrow money, exchange rate, and corporate bond spread. The results suggest that a Neural Network-VAR model offers improvements over the traditional linear VAR for forecasting certain macroeconomic variables in the long run. However, due to the limited sample size, the nonlinear model does not consistently outperform the linear VAR. |
| Keywords: | Forecasting; VAR; Neural Networks; Monetary policies; Euro area |
| JEL: | C32 C45 C53 E52 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ven:wpaper:2025:24 |
| By: | Bredl, Sebastian |
| Abstract: | The present paper utilizes AnaCredit loan-level data to examine the impact of regional loan market structure on lending rates. The analysis focuses on newly issued loans to small non-financial corporations in the euro area during the monetary policy tightening phase of 2022 and 2023. The findings suggest that banks tend to charge higher lending rates when they possess larger regional market shares. This outcome is driven by differences between banks rather than by individual banks adjusting their lending rates to regional market conditions. Overall, there is no strong evidence that market power conveyed by higher regional market concentration impeded the transmission of the monetary policy tightening to lending rates. If anything, there are indications that this type of market power may hinder the short-term pass-through of the unexpected component of monetary policy. |
| Keywords: | Lending rates, pass-through, loan market concentration |
| JEL: | D40 E43 G21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:330309 |
| By: | Daniel Maas; Roberto Panzica; Martín Saldías |
| Abstract: | This paper introduces the Macroprudential Two-Mode Network Analysis Toolbox (M2MN), a modular framework designed to assess credit risk shocks and contagion through overlapping exposures in banking systems. The M2MN toolbox uses a weighted two-mode network structure linking banks to grouped credit exposures, capturing indirect interconnectedness and systemic vulnerabilities arising from portfolio overlaps. The framework comprises three integrated modules: (i) a network diagnostics module that computes exposure-based metrics and community structures; (ii) a first-round sensitivity analysis simulating credit losses and capital impacts under CRR2 regulatory thresholds; and (iii) a second-round effects module. The toolbox is applied to supervisory data for 31 Portuguese banks, with calibrated scenarios targeting key exposures. Results show that most losses are absorbed by voluntary capital buffers, with limited contagion under conservative stress assumptions, reflecting the strong capitalization of the system. The M2MN toolbox provides a flexible and empirically grounded platform for systemic risk monitoring, buffer calibration, and supervisory scenario design, contributing to the refinement of macroprudential tools within the regulatory framework. |
| JEL: | C63 D85 G01 G10 G21 G28 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202512 |
| By: | SUNAKAWA, Takeki |
| Abstract: | We investigate the extent to which fiscal factors have contributed to inflation in Japan over the past four decades. Despite sustained fiscal expansion and rising debt since the 1990s, inflation remained low until recent years. Using the medium-scale DSGE model developed by Bianchi et al. (2023), we estimate the model with Japanese data and find that, in contrast to the U.S. case, unfunded fiscal shocks are not the main drivers of inflation in Japan. Instead, real demand and supply shocks, along with accommodative monetary policy, have played more significant roles in shaping inflation dynamics., First draft: July 2005. This draft: September 2025 |
| Keywords: | Inflation, Fiscal Theory of Price Level, Japan |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-151 |
| By: | Cleaver, Cynan; Guest, Oliver; Steenkamp, Daan |
| Abstract: | Inflation dispersion affects the extent to which inflation harms welfare. As a result, inflation dispersion bears on the optimal inflation target and assessment of the appropriate stance of policy at any particular point in time. In this policy brief, we propose a new measure of inflation dispersion for South Africa, drawing on hundreds of goods and services categories to summarise inflation pressure in South Africa. We show that inflation dispersion describes divergences in inflation from the inflation target. Our analysis suggests that a lower average inflation level may not automatically imply lower inflation dispersion in South Africa, making it harder to anchor inflation expectations at a lower inflation target. This means that reforms to address persistently high administered price inflation and monetary policy communication focused on what policy must do to address inertial price and wage settings are particularly important. |
| Keywords: | CPI dispersion, underlying inflation |
| JEL: | E31 E37 E58 |
| Date: | 2025–10–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126439 |
| By: | Denis Nikitin; Johan Schmalholz; Carolina Bloch |
| Abstract: | This paper explores how retail central bank digital currencies (CBDCs) could enhance the delivery of social safety nets (SSNs). It assesses CBDC design features and their implications for payment administration and delivery. Findings suggest that using CBDCs solely as payment delivery solutions offers limited advantages over existing systems such as faster payment systems. However, leveraging CBDCs as payment administration platforms—with peer-to-peer transfers, decentralized ledger access, and advanced programmability—could transform SSN delivery by enabling agencies to automate transfers, operate independently from private financial intermediaries, and monitor transactions directly. These benefits come with significant challenges, including privacy concerns, compliance risks, and infrastructure requirements. The paper emphasizes that realizing CBDCs’ full potential for SSNs will depend on thoughtful integration with existing systems and a clear understanding of their comparative advantages. Aimed at social protection policymakers and finance specialists, it highlights the need for collaboration between CBDC developers and SSN administrators to ensure that digital currencies effectively support inclusive and efficient benefit delivery. |
| Keywords: | Central Bank Digital Currencies; Social Safety Nets; Payment Systems; Government Transfers; Fintech; Financial Inclusion |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/211 |
| By: | Manabu Nose (Keio University, Faculty of Economics) |
| Abstract: | Domestic sovereign bonds have become a central source of government financing in Emerging Market and Developing Economies (EMDEs). This paper examines how fiscal policy expectations shape domestic bond yields and how this sensitivity depends on debt structure. A tractable framework grounded in the Fiscal Theory of the Price Level clarifies why fiscal shocks affect domestic, but not external, bond yields, emphasizing the importance of the sovereign–bank nexus, investor composition, and debt maturity profile. Following Laubach (2009)'s approach, a 1 percentage point increase in expected primary deficits results in a persistent increase in 10-year domestic bond yield by about 36 basis points over 2.5 years, whereas external bond spreads are more sensitive to global risk factors. The effect is magnified when domestic banks hold a larger share of sovereign debt, reflecting balance-sheet amplification. The post-pandemic shift toward domestic bank financing therefore suggests a tighter link between fiscal and financial risks, underscoring the importance of credible fiscal frameworks, diversified investor bases, and vigilant supervision to preserve debt sustainability in high-debt EMDEs. |
| Keywords: | Domestic bond yield, Fiscal discipline, Sovereign-bank nexus, Doom-loop, Debt holder composition, Fiscal-Monetary interaction, Fiscal Theory of the Price Level |
| JEL: | H60 E43 E63 F34 G12 |
| Date: | 2025–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2025-022 |
| By: | UGAI, Hiroshi; OSADA, Takeshi |
| Abstract: | This study empirically examines liquidity dependence in the Japanese banking system. Acharya and Rajan (2024) and Acharya et al. (2024) pointed out the phenomenon of liquidity dependence, which was observed during the U.S. quantitative easing and tightening policies and is regarded as a possible factor in liquidity crises in September 2019 and March 2023 crises in the U.S. Since quantitative easing was introduced in March 2001, the Japanese economy has experienced a more than 20-year period of quantitative easing, longer than that encountered in the U.S. Our macro and micro analysis employs more than 20 years of macroeconomic and bank-level accounting data and reveals that the same liquidity dependence phenomenon is observed in the Japanese economy. The Japanese broad deposit insurance system is superior to that in the United States, so an incident like the Silicon Valley Bank bankruptcy is unlikely to occur in Japan. However, partly with the rise of digital banking, we suggest that the Japanese economy needs to prepare for the impending major quantitative tightening—the so-called exit from the long-term quantitative easing policy. |
| Keywords: | Bank of Japan, quantitative easing, quantitative tightening, deposits, financial fragility, monetary policy |
| JEL: | G01 G2 E5 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-147 |
| By: | Tanweer Akram; Khawaja Mamun |
| Abstract: | This paper analyzes the dynamics of Canadian dollar-denominated (CAD) interest rate swap yields. It applies autoregressive distributive lag (ARDL) models, using monthly time series data, to estimate the effects of the current short-term interest rate and other relevant macro-financial variables on interest rate swap yields. It shows that the current short-term interest rate is a crucial driver of the swap yields of different maturity tenors. Similar patterns of interest rate swaps denominated in other hard currencies, such as the US dollar, euro, British pound sterling, and Japanese yen, have been discerned in previous empirical research testing the Keynesian hypothesis, which maintains that the current short-term interest rate has a decisive influence on the long-term interest rate. Thus, the findings of this paper lend additional support to the Keynesian hypothesis by showing that the same pattern holds for CAD interest rate swap yields. The results obtained in the paper can be useful for portfolio managers, corporate leaders, and policymakers. |
| Keywords: | Canadian Dollar Swaps; Interest Rate Swap Yields; Short-Term Interest Rate; Monetary Policy; Bank of Canada |
| JEL: | E43 E50 E60 G10 G12 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1072 |
| By: | L. Randall Wray |
| Abstract: | This working paper integrates the credit money approach (associated with Post Keynesian endogenous money theory) with the state money approach (associated with Modern Money Theory) by drawing on Wray's 1990 book (Money and Credit in Capitalist Economies: The Endogenous Money Approach, Edward Elgar), his 1998 book (Understanding Modern Money: the Key to Full Employment and Price Stability, Edward Elgar), and his 2004 edited book (Credit and State Theories of Money: The Contributions of A. Mitchell Innes, Edward Elgar). New sources and interpretation of the history of money make it clear that there is no contradiction between state money and private credit money--each played a role in the creation of the modern monetary system. Indeed, today's system was created by bringing state money into the private money giro, thereby strengthening both. |
| Keywords: | credit money; state money; Modern Money Theory (MMT); Bank of England; fiat money; giro money; history of money; central bank; nominalism; origins of money |
| JEL: | B25 B52 E42 E58 E62 N11 N20 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1076 |
| By: | Ranger, Nicola A.; Adam, Christopher; Arndt, Channing; Martín, Roberto Spacey |
| Abstract: | Climate change is driving three transformations in the landscape of global finance, with implications for central banks in Sub-Saharan Africa (SSA). First, pressures on financial institutions related to climate-related physical risks are mounting, with potential to threaten price and financial stability. Second, global and domestic responses to climate change are creating risks and opportunities for SSA economies. Third, the ongoing shift in the global financial architecture toward sustainability could either crowd-out or crowd-in international investment flows to SSA. Uncertainties in each increase the challenges for central banks and supervisors. We find that, without action, the risks outweigh the opportunities. To fulfil their mandates, SSA's central banks are obliged to react; however, the paucity of peer-reviewed evidence hinders the development and execution of appropriate responses. Preparedness is crucial if actions by SSA central banks are to play their part in shifting the balance towards managing risks and grasping opportunities. |
| Keywords: | climate change; central banking; Sub-Saharan Africa; financial markets; financial risk |
| JEL: | E58 O13 Q54 |
| Date: | 2025–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129898 |
| By: | Matias Iaryczower; Gabriel Lopez-Moctezuma; Paola Moscariello |
| Abstract: | In this paper, we quantify the distortions induced by career concerns within the Federal Open Market Committee (FOMC). We combine a structural approach with an unanticipated change in the information available to the public about internal committee deliberations. We show that—given the policy preferences of Fed Presidents and Board Governors serving in the FOMC—agents' incentives to appear competent and unbiased outweigh the distortions induced by anti-pandering and conformity. Relative to a counterfactual with no reputational considerations, career concerns improve the welfare of an unbiased principal. Given our estimates of career concerns, Transparency improves welfare relative to an Opaque regime in which internal deliberations are not made public. In a counterfactual exercise, we show that greater heterogeneity in regional shocks reduces conformity but increases policy errors under Transparency. |
| JEL: | C57 D78 E58 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34394 |
| By: | SEKINE, Toshitaka; WADA, Tetsuro |
| Abstract: | During the chronic deflation era starting in the 1990s, Japanese inflation expectations were said to be firmly anchored at a very low level, say, around zero. These expectations seemed to have become something like the social norm. Households were quite against any price hikes, and as a consequence, firms hesitated to raise their prices — when they raised prices, they apologized for their misbehavior. People not only expected that prices would not increase, but also believed that prices should not increase. That social norm may have changed in response to inflationary shocks after COVID-19 and the Ukraine war. We applied a natural language processing technique to tweets that commented on price hikes and found an increase in posts after 2021 that accepted price hikes for various goods. Some of these posts indicated even positive feelings and mentioned salary hikes. |
| Keywords: | tweet, natural language processing, sentiment analysis, inflation expectation, monetary policy, Japan |
| JEL: | C0 E31 |
| Date: | 2025–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-150 |