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on Monetary Economics |
| By: | Matthieu Bussière; Johanna Gilbert; Olesya V. Grishchenko |
| Abstract: | Using data on euro-area household inflation forecasts from the European Commission Consumer Survey, we show that households' perceptions of recent price changes play a key role in the formation of their inflation expectations. Such a relationship remains robust when we account for specific inflation components, household characteristics, and macroeconomic conditions, even though the perceptions-expectations relationship is heterogeneous across countries. These results highlight the importance of perceptions about inflation for the conduct of monetary policy. |
| Keywords: | surveys; inflation expectations; monetary policy communication; central banks |
| JEL: | E31 E58 E62 |
| Date: | 2026–06–03 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103378 |
| By: | Jorge Abad; Saki Bigio; Salomon Garcia-Villegas; Joël Marbet; Galo Nuño |
| Abstract: | How does heterogeneity in banks' interest-rate risk exposure shape monetary policy transmission? We develop a quantitative macroeconomic model of heterogeneous banks to answer this question. We establish an irrelevance result: differences in interest-rate risk exposure between fixed- and variable-rate banking systems matter for transmission only when bank solvency concerns become relevant. Calibrating the model to the euro area, we show that idiosyncratic default risk pushes a substantial share of banks toward the solvency threshold, making heterogeneity quantitatively important. When policy rates rise, fixed-rate banks suffer net interest margin compression---funding costs increase while legacy loan income stays unchanged---eroding capital and triggering sharper deleveraging. The lending elasticity to monetary policy is one-third larger in fixed-rate economies. The effects extend to financial stability: tightening raises bank failure rates in fixed-rate systems while lowering them in variable-rate systems. The results provide a rationale for macroprudential and monetary policy coordination and for monetary policy gradualism. |
| JEL: | E44 E50 G21 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35239 |
| By: | Stenfors, Alexis; Shabani, Mimoza; Gabauer, David; Toporowski, Jan |
| Abstract: | This study investigates the domestic transmission of inflation by examining how price dynamics interact within the Consumer Price Index (CPI) in the US, the UK, and Japan over the period January 1988 (January 1993 for the US) to March 2025. Using a time-varying parameter vector autoregression (TVP-VAR) connectedness framework, we quantify the extent and evolution of inflation interdependencies across disaggregated price series. The results show that inflation is driven not only by external shocks and policy conditions but also by endogenous interactions within the price system. Inflation transmission remains moderate on average but intensifies during periods of elevated inflation, indicating stronger propagation of price pressures. Fiscal interventions, such as Japan’s consumption tax increases, generate sharp but short-lived increases in transmission. Finally, we document a decline in inflation transmission over time, consistent with increased global integration and trade openness. These findings demonstrate that aggregate inflation measures overlook important internal dynamics. |
| Keywords: | consumer price index; inflation components; dynamic connectedness; inflation targeting; monetary policy |
| JEL: | C81 D43 E31 E52 |
| Date: | 2026–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138722 |
| By: | Valverde-Ambriz, Ismael D. |
| Abstract: | We develop a state-space framework that jointly estimates central bank credibility as a scalar latent variable and the associated time-varying monetary policy reaction function. The Kalman filter extracts an unobservable credibility index from observed inflation expectations, while Recursive Least Squares continuously updates the reaction function coefficients using the Kalman innovations sequence, ensuring that parameter estimation operates on long-run trend components rather than transitory fluctuations. Under standard regularity conditions, we establish consistency of the credibility estimator and show that the reaction function coefficients attain the Cramer-Rao bound when the innovation variance is constant; a GLS variant achieves efficiency in the heteroskedastic case. Applying the framework to Banco de Mexico over 2002-2024, we identify four distinct credibility regimes: a consolidation phase following the adoption of inflation targeting (2002-2008), a transitory shock during the global financial crisis (2008-2009), a sustained high-credibility equilibrium (2010-2020), and a stress episode associated with post-pandemic inflation (2021-2023) followed by partial recovery. The time-varying reaction coefficients reveal that Banco de Mexico's responsiveness to the inflation gap is itself a function of its credibility state: stronger anchoring permits a more measured policy response, while credibility deterioration triggers sharper, front-loaded adjustments. These findings have direct implications for the optimal design of monetary policy communication in emerging markets and for the broader debate on whether central bank credibility generates real persistent effects beyond its role in expectation coordination. |
| Keywords: | Central bank credibility, Kalman filter, recursive least squares, time-varying parameters, inflation targeting, emerging markets, Banco de Mexico |
| JEL: | C32 C33 E31 E52 E58 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129329 |
| By: | Thomas Drechsel; Michael McLeay; Silvana Tenreyro; Enrico D. Turri |
| Abstract: | We show that the optimal monetary policy and exchange rate framework depend critically on the economy’s commodity exposure. We develop a flexible but tractable model economy with commodity exports and imports, in which international financial conditions may vary with the commodity cycle, and we compute the welfare-optimal policy in the presence of price and wage rigidities. Stabilizing domestic prices is welfare-optimal for commodity exporters, in line with standard open-economy policy prescriptions. But for economies that use commodities as inputs in production, optimal policy largely ‘looks through’ the direct and indirect effects of commodity shocks on domestic prices; this contrasts with some earlier findings and policy practice (which only ‘looks through’ the direct effect). Exchange-rate pegs increase welfare for commodity importers because they stabilize wages and employment, though it is not a robustly optimal policy. In emerging and developing economies, where financial conditions are more tied to the commodity cycle, trade-offs are starker and implementing the optimal policy may be challenging, since it requires enough credibility to keep inflation expectations anchored amidst greater volatility in some nominal variables. |
| JEL: | E31 E52 E58 Q02 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35164 |
| By: | Edmund Crawley; William Goodwin; Margaret M. Jacobson; Fabian Winkler |
| Abstract: | In recent decades, an empirically estimated double-inertial rule fits the path of changes in the federal funds rate better than a standard inertial Taylor rule. Inertial Taylor rules aim to capture monetary policy gradualism via slow adjustments in the level of the policy rate. Double-inertial rules build on this specification by also gradually adjusting the pace of change in the policy rate. Because a double-inertial rule explains more than twice the variation of changes in the policy rate than its standard inertial counterpart, we argue that practitioners should consider a double-inertial rule when characterizing U.S. monetary policy. |
| Keywords: | monetary policy rules; federal funds rate; interest rates; central banks |
| JEL: | E43 E52 E58 |
| Date: | 2026–06–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103380 |
| By: | Ugo Dubois; Bruno Ducoudré; Raphaël Martin; Anna Petronevich; Caterina Seghini; Camille Thubin; Harri Turunen |
| Abstract: | This paper presents the updated and re-estimated version of the Banque de France’s semi-structural FR-BDF model, the institution’s core framework for quarterly projections and policy scenario analysis. The update reflects major statistical and structural shifts, including INSEE’s transition to a 2020 base year and the volatility during the COVID-19 period. The re-estimated model features a lower capital share, a weaker underlying productivity trend, a steeper price Phillips curve along with a flatter wage Phillips curve, while adding a credit block and an enhanced consumption equation that captures short-run income effects. The updated FR-BDF delivers stronger and faster real effects of monetary policy — with larger GDP and unemployment responses due to amplified transmission through long-term rates and the exchange rate — while nominal responses are more muted. Using the updated model, the recent monetary tightening is assessed to lower VA inflation by –0.6 pp and reduce GDP growth by 1 pp (at trough) under backward-looking expectations, whereas under forward-looking expectations the responses are more front-loaded and nearly three times larger. Under the more realistic hybrid expectations mode, VA inflation falls by about 1.2 percentage points and GDP growth by roughly 2 percentage points at the trough. These magnitudes remain broadly consistent with benchmark assessments reported in the literature. |
| Keywords: | Semi-structural Modeling, Expectations, Monetary Policy |
| JEL: | C54 E37 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1044 |
| By: | Kunal Sangani |
| Abstract: | We document a new source of fluctuations in inflation inequality. When the cost of upstream inputs rises, varieties within a product category tend to have similar absolute price increases. However, the same absolute price increase constitutes a larger percentage change for low-price products, resulting in excess inflation at the low end (“cheapflation”). Since low-income households tend to buy lower-priced varieties, the inflation rates they face are disproportionately sensitive to upstream costs. Using data on food-at-home purchases, we show that this mechanism generates cycles in inflation inequality and excessive volatility in inflation for low-income households relative to high-income households. This channel parsimoniously accounts for observed fluctuations in inflation inequality over time, including surges in cheapflation and inflation inequality during both the Great Recession and the 2021–2023 post-pandemic inflation. Official statistics mask these within-category differences in inflation and thus understate the differences in inflation experienced by low- and high-income households by 70–90 percent. We provide evidence that this mechanism applies to a range of consumption categories beyond food at home. The same mechanism also leads to systematic differences in inflation across cities and import price inflation across countries in response to nationwide and global cost shocks. |
| JEL: | E31 E32 L11 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35235 |
| By: | Paquiyauri Hinostroza, Renzo Maximo |
| Abstract: | This essay analyzes the evolution and determinants of the nominal exchange rate in Peru during the 2020–2026 period. Throughadescriptivemacroeconomicandinstitutionalanalysis, it examineshowthePeruvianSolfacedsevereshocks, such as the COVID-19 pandemic, periods of high domestic political uncertainty, and the Federal Reserve’s rate hike cycle. The role of the Central Reserve Bank of Peru’s (BCRP) foreign exchange interventions through the use of financial derivatives and the spot market is highlighted. Preliminary results show that, despite the initial extreme volatility, solid macroeconomic fundamentals and the managed floating strategy consolidated the Sol as one of the most stable and resilient currencies in the region in the post-pandemic environment |
| Keywords: | Nominal exchange rate; exchange rate policy; BCRP; foreign exchange interventions; macroeconomic; resilience. |
| JEL: | E52 |
| Date: | 2026–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129301 |
| By: | Xiwen Bai; Jesús Fernández-Villaverde; Yiliang Li; Francesco Zanetti |
| Abstract: | We study how global supply chain disruptions affect monetary policy transmission. Post-pandemic evidence indicates surging transportation costs, goods-market imbalances, and rising prices. We develop a model in which logistical bottlenecks (upstream slack coexisting with downstream shortages) steepen the aggregate supply curve. This convexity amplifies price responses to monetary policy while dampening output effects. Threshold VAR and Local Projection estimates are consistent with this mechanism: during disruptions, contractionary policy reduces prices more at smaller output cost, easing the stabilization trade-off. |
| JEL: | C32 E31 E32 E52 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35209 |
| By: | Peter Hoerdahl; Burcin Kisacikoglu; Dora Xia |
| Abstract: | Bond yields react to macroeconomic surprises, but the magnitude of this responsiveness depends on macroeconomic forecast disagreement and monetary policy uncertainty. Using intraday responses of US Treasury futures to surprises in macroeconomic data releases, we find that greater forecast disagreement about an economic indicator prior to its release dampens the yield curve response, while higher monetary policy uncertainty amplifies it. An exception is inflation surprises: prior to the post-COVID inflation surge, bond yield reactions to inflation surprises were not amplified by monetary policy uncertainty. We use a model with Bayesian learning to rationalize these findings. Specifically, large forecast disagreement indicates a weak link between the macroeconomic variable and future monetary policy, reducing the information value of macro news to forecast monetary policy. In contrast, during periods of high monetary policy uncertainty, macro news becomes more informative. Before the post-COVID inflation surge, investors may have perceived that the Federal Reserve placed little emphasis on its price stability mandate, which could have muted the yield curve response to inflation news even when policy rate uncertainty was high. The proposed model generates distinct, empirically testable effects of disagreement and monetary policy uncertainty on yield responses which, when extended to allow time-varying signal precision, accounts for the post-COVID shift in inflation sensitivity within a single unified framework. |
| Keywords: | macroeconomic news, forecast dispersion, policy uncertainty, bond yields, Bayesian learning |
| JEL: | E43 E44 G14 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1361 |
| By: | Cochrane, John H.; Garicano, Luis; Masuch, Klaus |
| Abstract: | In the last two decades, the euro area was hit by multiple crises. Fiscal and monetary emergency actions broke important constraints and expectations set by the euro’s founding principles. Several euro countries broke fiscal rules. As politicians expect European Central Bank (ECB) support for public debt in any crisis, they have weak incentives to build fiscal buffers, or to undertake needed fiscal reforms. Consequently, fiscal spaces for additional borrowing are dangerously narrow. Banks also expect ECB support, and bank regulators still treat sovereign debt as risk free. Consequently, banks hold large quantities of sovereign debt. Sovereign restructuring then imperils the financial system. Reforms are necessary to strengthen the euro, and with it the benefits the euro provides to euro area citizens. Euro countries must face market discipline to give incentives for responsible fiscal policy and economic efficiency. In the end, euro countries must be able to default, i.e. restructure their debt, in an orderly manner without this creating a major financial disaster. This possibility requires a banking regulation reform that avoids the current incentives for banks to accumulate large exposures to public debt, in particular of their own domestic sovereign. The euro area needs a well-constructed European Fiscal Institution (EFI) for the management of fiscal troubles and balance of payment problems of euro countries. The EFI needs all necessary powers, tools, the ability to make swift decisions, and sufficient capital financed by member states, to fully unburden the ECB. The ECB should reduce its footprint to protect its independence, its balance sheet, and thereby its ability to fight inflation even in times of fiscal trouble. The ECB must stop quashing true market signals that give incentives for sound fiscal policies and prudent risk management of banks. The ECB should stay away from quasi-fiscal interventions, such as balance sheet policies that favor fiscally fragile countries and their bondholders and create fiscal transfers between countries and from taxpayers to banks. |
| Keywords: | monetary policy; fiscal policy; monetary union; ECB; sovereign default |
| JEL: | E42 E52 E58 E62 |
| Date: | 2026–05–22 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138669 |
| By: | Elizabeth C. Klee; Arazi Lubis; Chase Ross; Sharon Y. Ross; Alexandros Vardoulakis |
| Abstract: | Digital money differs from previous forms of money in an important way: it unbundles trust. Instead of relying on a trustworthy institution to settle payments, it relies on decentralized verification, whose cost is priced separately through congestion-sensitive gas fees. This arrangement creates a novel fragility from the interaction of two opposing forces: network externalities, which make digital money more valuable as adoption rises, and congestion fees, which make it more costly to use. We show that these forces generate strategic complementarities in redemption decisions and can create runs even when digital money is backed by perfectly safe reserves. |
| Keywords: | payment systems; digital currencies; cryptocurrencies; game theory; bank runs |
| JEL: | C72 E42 E44 G01 G23 |
| Date: | 2026–06–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103381 |
| By: | Bhattarai, Keshav; Adhikari, Ambika P. (Institute for Integrated Development Studies (IIDS)) |
| Abstract: | The United States dollar’s dominance as the global reserve currency, established under the 1944 Bretton Woods system, has persisted despite the 1971 decoupling of the dollar from gold. Its liquidity, stability, and backing by the U.S. government provide strong financial security and advantages, including widespread global acceptance and relatively low borrowing costs. For these reasons, the U.S. dollar has dominated global markets for the past eight decades. However, rapidly emerging geopolitical and economic power shifts are increasingly challenging the dominance of the U.S. dollar. In 2009, Brazil, Russia, India, China, and South Africa formed BRICS as a platform for collaboration and investment cooperation. BRICS, which has since expanded to include ten countries, is exploring alternatives to the U.S. dollar for international trade. These alternatives include trade in local currencies and the use of Central Bank Digital Currencies (CBDCs). Western sanctions on China, Russia, Iran, and other countries, as well as China’s ambitious Belt and Road Initiative, have further accelerated efforts to reduce dependence on the dollar-based system. These emerging trends have mixed implications for South Asia. India is actively promoting rupee-based trade to strengthen regional commerce using the Indian Rupee, and several South Asian countries aspire to pursue similar approaches. The limited convertibility of the currencies of BRICS member nations makes a complete replacement of the U.S. dollar in international trade difficult. Nepal, in particular, may face substantial challenges because its economy relies heavily on remittances and imports, both of which remain closely tied to the global dollar-based financial system. |
| Date: | 2025–02–15 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:s75q4_v1 |
| By: | Jan Lukas Schäfer (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Previous studies have shown that banks avoid passing negative monetary policy rates through to depositors, implying losses in deposit taking that erode equity and eventually have a negative impact on the lending of capital constrained banks. This paper shows that unconstrained banks respond differently, increasing loan supply even more with a deposit zero lower bound (D-ZLB) than without it. As a result, rate cuts below zero can be more stimulative than in positive territory, provided enough banks are unconstrained. A calibrated dynamic model finds this effect substantial, increasing aggregate loan supply by about 9% despite equity erosion pressures. |
| Keywords: | Negative interest rates; bank lending; deposit zero lower bound; financial stability. |
| JEL: | E43 E52 G21 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2026_2606 |
| By: | Matej Opatrny (Institute of Economic Studies, Charles University, Prague); Martin Opatrny (Anglo-American University, Prague); Tomas Havranek (Institute of Economic Studies, Charles University, Prague & Centre for Economic Policy Research (CEPR), London & Meta-Research Innovation Center at Stanford (METRICS)); Zuzana Irsova (Institute of Economic Studies, Charles University, Prague & Meta-Research Innovation Center at Stanford (METRICS)); Mojmir Hampl (Czech Fiscal Council, Prague, Czech Republic) |
| Abstract: | We revisit the optimal long-run inflation rate using 777 estimates from 116 primary studies published between 1989 and 2026, the largest sample on the topic to date. To our knowledge, this is among the first economics meta-analyses in which primary-data extraction is done from start to finish through a documented and auditable large-language-model pipeline, calibrated against a hand-coded training set and released for replication. The literature points to an optimum of about 0.6 percentage points per year, well below the two-percent targets used by most advanced-economy central banks. The gap should not be automatically read as a verdict against the two-percent norm. Measurement error in published price indices could close, widen, or even reverse the gap, and the structural literature itself cannot pin down the sign of the required correction. Bayesian model averaging over the full set of structural moderators shows that cross-study variation is driven by real modelling choices rather than by selective reporting. The main drivers are the choice of monetary benchmark (Friedman rule vs. laissez-faire), the transactions-frictions technology, the assumed shock structure, and the class of nominal-rigidity contract. The non-parametric caliper test finds no upward bunching at the two-percent target. The paper contributes a reproducible LLM-assisted extraction pipeline for structurally calibrated literature and a quantitative decomposition of where the optimal-inflation literature disagrees. |
| Keywords: | Meta-analysis, optimal inflation rate, New Keynesian models, publication bias, Bayesian model averaging, measurement error, large language models |
| JEL: | E31 E52 C11 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_14 |
| By: | Antonio Rodriguez Gil; Douglas Alencar |
| Abstract: | The aim of this paper is to investigate the existence of hysteresis in Latin American (LATAM) economies. Hysteresis refers to the effect that shocks and macroeconomic policies, such as monetary policy, can have in the unemployment equilibrium of the economy. Evidence from OECD economies has grown in recent years, however, existing literature for Latin American countries is very limited. We extend this incipient literature, by providing a formal test of the relationship between macroeconomic policies, in this case, monetary policy, and unemployment. To do so, we built a panel of ten countries, namely, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru and Uruguay, covering the period between 2010 and 2022. We test the hysteresis hypothesis using a Panel-ARDL approach controlling for key Labour Market Institutions (LMI), such as, benefits, labour taxation, union power and minimum wages. Our findings indicate that interest rates set by Central Banks, significantly affect unemployment in the long run, hence, providing support to the hysteresis hypothesis. As per our results 1% increase in interest rates lead to a rise in equilibrium between 0.40 and 0.79 percentage points. Furthermore, our results are robust to a battery of tests including alternative LMIs definitions, accounting for heterogeneity across economies, and changes to the geographical and time scope. We also use Instrumental Variables analysis to rule out endogeneity. Our findings question the consensus among Central Banks and international institutions, that monetary policy can be used to manage inflation and exchange rates at no cost for the real equilibria of the economy. Furthermore, our results question the renewed interest in labour market structural reforms in the region. |
| Keywords: | Hysteresis, Unemployment, Monetary policy, LATAM, Panel ARDL |
| JEL: | C33 E02 E12 E24 N16 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2615 |
| By: | Christophe J Godlewski (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg); Małgorzata Olszak (Faculty of Management [Warsaw] - UW - Uniwersytet Warszawski [Polska] = University of Warsaw [Poland] = Université de Varsovie [Pologne]) |
| Abstract: | We examine how macroprudential policy influences the structure of syndicated corporate loan contracts. Using a dataset of 4, 853 European syndicated loans matched with detailed macroprudential policy indicators across nineteen EU countries, we study the impact of regulatory stance on loan amount, maturity, collateral and covenant use. Stricter macroprudential policy is associated with larger loans and a higher probability of collateralization, while macroprudential loosening reduces loan size. These adjustments occur along the intensive margin rather than through outright credit rationing and are concentrated among medium-sized loans and longmaturity facilities. We also show that borrower and lender characteristics mediate the response: larger, more leveraged firms and well-capitalized arranging banks are the primary drivers of the increase in loan size and collateral use. Our findings reveal a novel micro-level transmission channel of macroprudential policy and indicate that regulatory tightening reallocates credit toward safer contracts rather than suppressing overall lending. |
| Keywords: | Macroprudential policy |
| Date: | 2025–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05392486 |
| By: | Lara Loewenstein; Hugh G. Montag; Randal Verbrugge |
| Abstract: | Shelter is the largest component of US consumer price index (CPI) inflation; therefore, the accuracy of shelter inflation is critical for the accuracy of overall CPI inflation. Nonresponse in the BLS Housing Survey, which underpins the measurement of CPI shelter inflation, has increased since 2000 and now represents roughly 40 percent of total observations. Missing rent data are currently imputed using a class-mean approach based on rent tier, potentially resulting in biased imputations, as we find that nonresponse is correlated with factors beyond rent tier. We study alternative simple imputation methods based on variables correlated with both nonresponse and rent growth, including structure type and tenure length. A simple model demonstrates that alternative methods could yield sharply different index biases. However, in practice, we find that these alternative methods yield similar shelter inflation indexes, suggesting that any index bias may be modest. |
| JEL: | C81 E31 R31 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35250 |
| By: | Anneke Kosse; Tara Rice; Fabian Schär; Takeshi Shirakami; Jirapat Siridhasanakul |
| Abstract: | Stablecoin transfers are often interpreted as payments. On programmable blockchains, however, they are frequently embedded in atomically executed transaction bundles that combine trading, lending, arbitrage, liquidity provision, and settlement. We show that ignoring this structure materially distorts the interpretation of stablecoin activity. Using 593 million event logs from 141 million Ethereum transactions involving three major U.S. dollar stablecoins, we develop a replicable framework to measure transaction complexity from archive node data, public contract labels, and event signatures. The analysis combines measures of token and contract co-usage, action type, computational complexity, urgency, and timing. Two results emerge. First, complexity is a first-order feature of stablecoin activity: nearly 60 percent of transfer events occur within complex transactions. Second, the three stable coins are not used interchangeably: their use differs systematically across transaction structures, urgency, and timing, consistent with distinct institutional designs and economic functions. Analyses that treat transfers as standalone payments therefore risk misclassifying a large share of on-chain stablecoin use, with implications for empirical measurement, market monitoring, and policy. |
| Keywords: | blockchain, payments, policy and regulation, stablecoins, transaction complexity |
| JEL: | E42 O33 G28 C81 G23 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1359 |
| By: | Stefan Scharnowski (University of Mannheim); Yanghua Shi (International University of Japan) |
| Abstract: | Miners of proof-of-work networks like Bitcoin tend to gravitate towards countries with cheap energy. We analyze risks associated with this geographical centralization by exploiting a local electricity supply shock. Compared to a control group consisting of an energy-efficient proof-of-stake cryptocurrency, the blockchain fs capacity for transactions decreases while transaction fees widen substantially. The increased settlement latency on the blockchain also reduces secondary market quality as seen in higher exchange rate volatility, lower liquidity, and larger price differences between exchanges. Overall, our results suggest that geographical centralization poses short-lived, but potentially severe system-wide risks to proof-of-work networks. |
| Keywords: | Bitcoin, blockchain, proof-of-work, proof-of-stake, mining, centralization |
| JEL: | G10 G12 G14 G15 Q40 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2026_08 |
| By: | Erwan Gautier; Véronique Genre; Léo Parpais |
| Abstract: | The outbreak of the conflict in the Middle East occurred during the data collection phase of the Banque de France survey on firms’ inflation expectations, providing a unique opportunity to observe business leaders’ assessments “in real time. In the first days of the conflict, they revised their short-term inflation expectations upwards, while their longer-term expectations were less affected. <p> Le conflit au Moyen-Orient est survenu pendant la collecte de l’enquête de la Banque de France sur les anticipations d’inflation des chefs d’entreprise, offrant une occasion unique d’observer « à chaud » leur appréciation. Sur les premiers jours de guerre, ils révisent à la hausse leurs anticipations d’inflation à court terme tandis que leurs anticipations à plus long terme sont moins affectées. |
| Date: | 2026–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:econot:452 |
| By: | Sangyup Choi (Yonsei University); Hyunpyung Kim (University of Texas at Austin) |
| Abstract: | This paper estimates Korea's long-run real neutral interest rate and quantifies the structural forces behind its decline since 1990. Using semiannual data for 12 advanced economies over 1990-2024, we estimate a cross-country panel state-space model that separates country-specific productivity and demographic trends from common global components. Korea's neutral rate falls from about 1.6% in 1990 to roughly 0.7% in 2024. The model attributes this decline mainly to slower trend productivity growth, the post-2014 reversal in the working-age population share, and spillovers from major advanced economies. Safe-asset market forces also contribute, but supply and demand effects partly offset each other. Counterfactual simulations suggest that removing global spillovers would raise the 2024 estimate by about 0.6 percentage points, while holding the working-age share at its 2014 level would raise it by about 0.5 percentage points. Conditional demographic scenarios imply continued downward pressure absent offsetting structural changes, highlighting implications for monetary policy space. |
| Keywords: | Neutral interest rate; Demographic changes; Korean economy; Global spillovers; State space model |
| JEL: | E43 E47 E58 F15 F62 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2026rwp-292 |