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on International Finance |
| By: | Swapan-Kumar Pradhan; Eswar S. Prasad; Judit Temesvary |
| Abstract: | We investigate how the U.S. dollar's prominence in the denomination of international debt securities has evolved in recent decades, using a comprehensive global dataset with far more extensive coverage than datasets used in prior literature. We find no monotonic dollarization or de-dollarization trend; instead, the dollar's share exhibits a wavelike pattern. We document three dollarization waves since the 1960s. The last wave, following the global financial crisis, lifted the dollar's share nearly back to its level at the euro's launch in 2000. Our findings are robust to composition and currency valuation effects as well as alternative data definitions. |
| Keywords: | International debt securities; Currency denomination; Nationality and residence basis; Reserve currencies; Banks; Nonbank financial institutions; Nonfinancial corporations |
| JEL: | F30 F41 G15 |
| Date: | 2025–12–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:1429 |
| By: | Souleymane Faye (EU Tax Observatory); Sarah Godar (EU Tax Observatory, DIW Berlin); Carolina Moura (EU Tax Observatory); Gabriel Zucman (Paris School of Economics, Berkeley, EU Tax Observatory) |
| Abstract: | This paper constructs homogeneous time series of global household offshore wealth covering the 2001–2023 period, during which major international efforts were implemented to curb offshore tax evasion. We find that: (i) global offshore wealth remained broadly stable as a fraction of global GDP since 2001, following a sharp increase in the 1980s and 1990s; (ii) the location of offshore wealth changed markedly, with a decline in the share held in Switzerland and a rise of Asian financial centers, the United Kingdom, and the United States; and (iii) a growing fraction comes from developing countries. |
| Keywords: | Tax havens, Tax evasion, Wealth, International investment positions |
| JEL: | H26 H87 E21 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:041 |
| By: | Viral V. Acharya; Toomas Laarits |
| Abstract: | We explain how the “Tariff War” shock of April 2025 affected the safe-asset status of US Treasuries. Convenience yield erosion for long bonds is consistent with a reduction in the hedging property, reflected in a rising stock-bond covariance. Decomposing the Treasury yield into risk-free rate, credit spread, and convenience yield components reveals that covariance due to the convenience yield component increased for long bonds. The short end of the Treasury curve, however, continued to exhibit the safe-asset hedging property. These effects are consistent with a withdrawal of safe-asset investors from long-term Treasuries and a rotation towards shorter-term Treasuries and gold. |
| JEL: | E4 E5 F3 G11 G12 G15 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34640 |
| By: | Katharina Bergant; Andrés Fernández; Ken Teoh; Martín Uribe |
| Abstract: | Employing large language models to analyze official documents, we construct a comprehensive record of daily changes in de jure restrictions on cross-border flows worldwide since the 1950s. Our analysis uncovers the wide array of instruments used to regulate cross-border financial flows and documents their evolving prevalence over the past seven decades. The fine granularity of the new measures allows us to characterize cross-country and time-series variation across eight categories of restrictions, further distinguishing by flow, direction, instrument type, and overall policy stance. We exploit the high frequency nature of the new data to document novel patterns in the use of these restrictions, as well as their relationship to crises, and political economy determinants. We validate our measures against established indicators of capital account regulation and show that our LLM-based classifications both replicate and substantially extend these benchmarks along multiple dimensions. Finally, we examine policymakers’ stated motivations for adopting these restrictions and account for the intensive margin of these policy actions. |
| JEL: | F32 F38 F41 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34615 |
| By: | Mario Forni; Alessandro Franconi; Luca Gambetti; Luca Sala |
| Abstract: | We investigate the asymmetric transmission of oil supply news shocks to the U.S. economy using a nonlinear Proxy-SVAR framework. Building on the methodology of Debortoli et al. (2023), we identify exogenous oil supply news shocks using high-frequency surprises in oil futures prices around OPEC announcements (Känzig, 2021). Our results reveal strong evidence of asymmetries: a positive oil supply news shock, which raises oil prices, produces a large and persistent contraction in real activity and only a modest and transitory increase in prices. Conversely, a negative shock that reduces oil prices has small real effects but triggers a sizeable and persistent decline in inflation. We rationalize these asymmetric effects through the behavior of uncertainty. We show that both positive and negative shocks increase financial uncertainty and the excess bond premium, leading to higher risk premia and delaying investment decisions through “real option” effects. This uncertainty channel amplifies the contractionary impact of positive shocks while dampening the expansionary effects of negative shocks on output, with the opposite pattern observed for prices. We find little evidence of an asymmetric response of monetary policy. |
| Keywords: | Oil Supply News, Nonlinear Proxy-SVAR, Asymmetry |
| JEL: | C32 E31 E32 Q43 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1020 |
| By: | Eric Vansteenberghe |
| Abstract: | This paper investigates how dispersion in banks’ subjective inflation forecasts is a channel of the transmission of monetary policy to credit supply. We extend the Monti--Klein model of monopolistic banking by incorporating risk aversion, subjective beliefs, and ambiguity aversion. The model predicts that greater inflation uncertainty or asymmetry in beliefs raises equilibrium loan rates and amplifies credit rationing. Using AnaCredit loan-level data for France, we estimate finite-mixture density regressions that allow for latent heterogeneity in loan pricing. Empirically, we find that higher subjective uncertainty and asymmetry both increase average lending rates and skew their distribution, disproportionately affecting financially constrained firms in the right tail. Quantitatively, moving from the 25th to the 75th percentile of our indicators raises average borrowing costs by more than 10 basis points, which translates into roughly 0.5 billion euros of additional annual interest expenses for non-financial corporations. By contrast, forecast disagreement has a weaker and less systematic effect. Taken together, these results show that uncertainty and asymmetry in inflation expectations are independent and powerful drivers of credit conditions, underscoring their importance for understanding monetary policy transmission through the banking sector. |
| Keywords: | Monetary Policy Transmission, Inflation Uncertainty, Bank Lending |
| JEL: | D84 E52 G21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1025 |
| By: | Leonardo Gambacorta; Enisse Kharroubi; Aaron Mehrotra; Tommaso Oliviero |
| Abstract: | This paper investigates whether the positive effects of generative artificial intelligence (gen AI) on growth rate of value added differ across countries in the short run. Using an empirical strategy inspired by Rajan and Zingales (1998) and a dataset covering 56 economies and 16 industries, we find that the differential growth effects arise from variations in sectoral exposure to cognitive and knowledge-intensive activities, differences in production structures, and countries' AI preparedness. Our results suggest that, on average, gen AI is likely to benefit advanced economies more than emerging market economies, thereby widening global income disparities in the near term. |
| Keywords: | generative artificial intelligence, emerging market economies, economic growth; productivity differentials, technological readiness, sectoral exposure to AI |
| JEL: | E24 O47 O57 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1321 |
| By: | Kaan Celebi (Chemnitz University of Technology); Christina Anderl (Bank of England) |
| Abstract: | This paper examines the FDI-unemployment nexus in OECD countries from both theoretical and empirical perspectives. We first build a search and matching model which accounts for inward and outward FDI capital stocks and identifies key channels through which FDI affects unemployment. In a subsequent empirical panel ARDL estimation, we show that both inward and outward FDI can reduce unemployment conditional on technological and institutional factors. Inward FDI is most unemployment-reducing in less innovative and less technologically advanced countries, while for outward FDI this is the case in technologically more advanced countries with sufficient absorptive capacity and stronger bargaining institutions. For inward (outward) FDI, the technology diffusion (reverse spillover and head-office) channel dominates these long run effects. Our findings imply that policies which strengthen absorptive capacity, diffusion, and domestic linkages can make FDI more employment-friendly, whereas in advanced economies the composition and integration of FDI may matter more than broad FDI-attraction alone. |
| Keywords: | FDI, unemployment, panel ARDL, matching model |
| JEL: | E F |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2026.01 |
| By: | Elizaveta Lukmanova (Central Bank of Ireland); Katrin Rabitsch (Vienna University of Economics (WU), Department of Economics) |
| Abstract: | In light of recent evidence on the significant contribution of persistent monetary shocks to inflation dynamics in the U.S., we study their international transmission. In contrast to standard temporary nominal interest rate shocks, persistent shocks increase long-run inflation and the nominal rate while decreasing the real rate. We find that it leads to non-negligible international spillovers and dollar depreciation. We further show that when it comes to understanding the international spillover effects of U.S. monetary policy, persistent monetary policy shocks rather than temporary nominal interest rate shocks have the potential to explain long-run co-movements of macroeconomic variables across advanced countries. |
| Keywords: | Monetary Policy, International spillovers, Long-run Inflation, Neo-Fisher effect |
| JEL: | E12 F31 E52 E58 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp394 |
| By: | Giuzio, Margherita; Kahraman, Bige; Knyphausen, Jasper |
| Abstract: | This paper examines the relevance of banks’ exposure to climate transition risk in the interbank lending market. Using transaction-level data on repo agreements, we first establish that banks with higher exposure to transition risk face significantly higher borrowing costs. This premium is a combination of a risk premium, compensating lenders for increased credit risk, and an inconvenience premium, reflecting the sustainability preferences of key dealer banks. We also find that the transition risk premium intensifies during periods of financial stress, indicating that climate-induced risks amplify existing vulnerabilities in financial markets. Furthermore, the rate segmentation caused by transition risk premium has implications for the transmission of monetary policy. Transition risk is an important factor in financial stability and policy design. JEL Classification: Q54, G21, G32, Q58 |
| Keywords: | climate finance, financial stability, repo markets, risk premium, transition risk |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263168 |