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on Monetary Economics |
| By: | Liang, Pauline (Stanford U); Sampaio, Matheus (Northwestern U); Sarkisyan, Sergey (Ohio State U) |
| Abstract: | We examine the impact of digital payments on the transmission of monetary policy by leveraging administrative data on Brazil's Pix, a digital payment system. We find that Pix adoption diminished banks' market power, making them more responsive to changes in policy rates. We estimate a dynamic banking model in which digital payments amplify deposit demand elasticity. Our counterfactual results reveal that digital payments intensify the monetary transmission by reducing banks' market power-banks respond more to policy rate changes, and loans decrease more after monetary policy hikes. We find that digital payments impact monetary transmission primarily through the deposit channel. |
| JEL: | E42 E52 G21 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecl:ohidic:2024-14 |
| By: | Christian de Boissieu |
| Abstract: | Faced with the rise of cryptocurrencies, central banks are responding by launching their digital currencies. The purpose of this Policy Brief is to provide an update on the preparation of central bank digital currencies (CBDs) by monetary authorities, a process that concerns all emerging, developing, and more advanced countries. It is also about analyzing the conditions and some of the consequences (for banks, for financial inclusion, for the conduct of monetary policy...) of such a financial innovation, systematically distinguishing between wholesale and retail CBDCs. |
| Date: | 2023–04 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbtrad:pb_19_23 |
| By: | Lukas Berend; Jan Pr\"user |
| Abstract: | We use a FAVAR model with proxy variables and sign restrictions to investigate the role of the euro area common output and inflation cycles in the transmission of monetary policy shocks. We find that common cycles explain most of the variation in output and inflation across member countries, while Southern European economies show larger deviations from the cycles in the aftermath of the financial crisis. Building on this evidence, we show that monetary policy is homogeneously propagated to member countries via the common cycles. In contrast, country-specific transmission channels lead to heterogeneous country responses to monetary policy shocks. Consequently, our empirical results suggest that the divergent effects of ECB monetary policy are due to heterogeneous country-specific exposures to financial markets and not due to dis-synchronized economies of the euro area. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.05741 |
| By: | Tatiana Kirsanova; Campbell Leith; Ding Liu |
| Abstract: | We develop a New Keynesian model augmented with a rich description of fiscal policy, including debt maturity structure, where two policymakers- an independent inflation-averse central bank and a (potentially) populist fiscal authority- interact strategically. Central bank independence initially improves inflation outcomes, but this results in reduced fiscal discipline and increased debt. Eventually this leads to inflation lying above pre-independence levels. Introducing a ‘flight-to-safety’ regime, which suppresses the interest rates households require to hold government debt, and a conventional regime, where their time preferences return to normal, allows us to explore how changes in the natural rate can dramatically affect debt dynamics and inflation outcomes. The model offers an explanation of the buildup of government debt since the financial crisis and the subsequent emergence of significant inflation |
| Keywords: | New Keynesian Model; Central Bank Independence; Government Debt; Monetary Policy; Fiscal Policy; Time Consistency. |
| JEL: | E31 E43 E62 E63 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:gla:glaewp:2024_10 |
| By: | Thomas Ferguson (Institute for New Economic Thinking); Servaas Storm (Delft University of Technology) |
| Abstract: | This paper analyzes claims that the Federal Reserve is principally responsible for the decline of inflation in the U.S. We compare several different quantitative approaches. These show that at most the Fed could plausibly claim credit for somewhere between twenty and forty percent of the decline. The paper then examines claims by central bankers and their supporters that a steadfast Fed commitment to keeping inflationary expectations anchored played a key role in the process. The paper shows that it did not. The Fed's own surveys show that low-income Americans did not believe assurances from the Fed or anyone else that inflation was anchored. Instead, what does explain much of the decline is the simple fact that most workers nowadays cannot protect themselves by bargaining for higher wages. The paper then takes up the obvious question of why steep rises in interest rates have not so far led to big rises in unemployment. We show that recent arguments by Benigno and Eggertson that shifts in vacancy rates can explain this are inconsistent with the evidence. The biggest factor in accounting for the strength in the economy is the continuing importance of the wealth effect in sustaining consumption by the affluent. This arises, as we have emphasized in several papers, from the Fed's quantitative easing policies. Absent sharp declines in wealth, the continuing importance of this factor is likely to feed service sector inflation in particular. |
| Keywords: | Inflation; wage-price spiral; inflation expectations; effectiveness of monetary tightening; Phillips curve; central bank credibility; labor market tightness; real earnings growth; earnings uncertainty; the Beveridge ratio; wealth; wealth effect on consumption; affluent consumption; services inflation. |
| JEL: | E0 E5 E6 E62 O23 I12 J08 |
| Date: | 2024–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp227 |
| By: | Donni Fajar Anugrah (Bank Indonesia); Retno Muhardini (Bank Indonesia); Wahyoe Soedarmono (Sampoerna University); Zaki Intan Cindyagita (Bank Indonesia) |
| Abstract: | Inflation is a crucial topic that has been extensively researched by academics and government authorities, including central banks as monetary authorities. Maintaining inflation at a stable and low level is a fundamental basis for improving the well-being of the population and sustaining economic growth. This research aims to conduct a comprehensive literature review of Bank Indonesia's internal research and studies on inflation, with the objective of identifying research gaps to recommend future research directions. Through a literature survey method, 149 research outcomes/internal studies published by Bank Indonesia from 1965 to 2022 in the Bank Indonesia's internal repository were collected and reviewed. Findings from this literature study provide a complex overview of the factors influencing inflation and the policies required to achieve sustainable price stability in Indonesia. The review in this study encompasses inflation from basic theory, spatial aspects, inflation disaggregation, medium-run price formation, Phillips Curve theory, and various other empirical analyses. Differences in inflation literature findings between the preInflation Targeting Framework (ITF) and post-ITF periods are also discussed. Several recommendations are proposed, including suggestions for research that support intensified multidisciplinary studies and a deeper understanding of inflation. |
| Keywords: | Inflation, Monetary Policy, Inflation Targeting, Literature Study |
| JEL: | E31 E52 E61 |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:idn:wpaper:wp092023 |
| By: | García-Lembergman, Ezequiel; Hajdini, Ina; Leer, John; Pedemonte, Mathieu; Schoenle, Raphael |
| Abstract: | Using a novel dataset that integrates inflation expectations with information on social network connections, we show that inflation expectations within one's social network have a positive, causal relationship with individual inflation expectations. This relationship is stronger for groups that share common demographic characteristics such as gender, income, or political affiliation and when salient information disseminates through the network. In a monetary union New-Keynesian model, socially determined inflation expectations induce imperfect risk-sharing and can affect the inflation and real output propagation of local and aggregate shocks. To reduce welfare losses due to socially determined expectations, monetary policy should optimally put more weight on the inflation rate of socially more connected regions. |
| Keywords: | Inflation expectations;Social network;Monetary union |
| JEL: | E31 E71 C83 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13787 |
| By: | Guerreiro, Joao (UCLA); Hazell, Jonathon (London School of Economics); Lian, Chen (UC Berkeley); Patterson, Christina (University of Chicago Booth School of Business) |
| Abstract: | How costly is inflation to workers? Answers to this question have focused on the path of real wages during inflationary periods. We argue that workers must take costly actions ("conflict") to have nominal wages catch up with inflation, meaning there are welfare costs even if real wages do not fall as inflation rises. We study a menu-cost style model, where workers choose whether to engage in conflict with employers to secure a wage increase. We show that, following a rise in inflation, wage catch-up resulting from more frequent conflict does not raise welfare. Instead, the impact of inflation on worker welfare is determined by what we term "wage erosion"—how inflation would lower real wages if workers' conflict decisions did not respond to inflation. As a result, measuring welfare using observed wage growth understates the costs of inflation. We conduct a survey showing that workers are willing to sacrifice 1.75% of their wages to avoid conflict. Calibrating the model to the survey data, the aggregate costs of inflation incorporating conflict more than double the costs of inflation via falling real wages alone. |
| Keywords: | inflation, wages, conflict |
| JEL: | E31 J52 J31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17339 |
| By: | Mistak, Jakub; Ozkan, F. Gulcin |
| Abstract: | This paper examines the asymmetry in global spillovers from Fed policy across tightening versus easing episodes several examples of which have been on display since the global financial crisis (GFC). We build a dynamic general equilibrium model featuring: (i) occasionally binding collateral constraints in the financial sector with significant cross-border exposure; and (ii) global supply chains, allowing us to match the asymmetry of spillovers across contractionary versus expansionary monetary policy shocks. We find clear asymmetries in the transmission of US monetary policy, with significantly larger spillovers during contractionary episodes under both conventional and unconventional monetary policy changes. Our results also reveal that the greater the size of international credit and supply chain networks and the policymakers’ aversion to exchange rate fluctuations in the rest of the world, the greater the spillover effects of US monetary policy shocks. JEL Classification: E52, F41, E44 |
| Keywords: | capital flows, emerging markets, monetary policy, spillovers, supply chains |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20242995 |
| By: | Jan Toporowski (SOAS, University of London) |
| Abstract: | The discussion of financial stability, and the role of monetary policy, is incoherent because there is very little agreement on what constitutes financial stability (and, by implication, instability) - exchange rate stability, asset price stability, absence of debt default. By implication, there is a gap between the claims of various authors to the general applicability of their respective analyses, and the actual applicability of their conclusions, let alone the usefulness of some of their policy recommendations. The paper argues that the key issue is the regulation of the liquidity of all financial markets, and not just that of the banking system, through the markets for government securities. The paper examines the sources of this liquidity in the financial portfolios of the private sector, and how that liquidity may be managed through the open market operations of central banks and the debt management operations of governments. An implication of this approach is yield curve control and the use of (government) debt management to control the liquidity of the markets. These elements of monetary policy have been neglected in theory and policy since the 1950s. |
| Keywords: | monetary policy, liquidity, debt management, yield curve control. |
| JEL: | E50 G24 G29 H63 |
| Date: | 2024–01–24 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp218 |
| By: | Jérôme Creel (OFCE); François Geerolf; Sandrine Levasseur; Xavier Ragot; Francesco Saraceno |
| Abstract: | During the recent inflation episode, the paradigm of separated objectives for monetary and fiscal policies has shown some limits. Fiscal policies have helped mitigate inflation. We advocate for the emergence of a new paradigm that gives equal consideration to fiscal and monetary policies and their interactions. These interactions and their respective spillover effects demand better political coordination and a good dose of pragmatism, in contrast with the binding rules embedded in the separation paradigm so present in the European governance framework. The latter should give more leeway to supply-driven fiscal policies and learn from the US experience. |
| Keywords: | fiscal policy, monetary policy, inflation, Tinbergen, coordination |
| JEL: | E50 E60 H12 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:agz:wpaper:2404 |
| By: | Alfred Duncan; Joao Pedro De Camargo Mainente; Charles Nolan |
| Abstract: | We present a model with macroprudential externalities emerging from market allocation of aggregate risks. The model predicts a paradox of safety: an increase in household risk aversion increases the volatility of output and consumption. Optimal monetary and macroprudential policies are designed to stabilise the economy whilst not exacerbating moral hazard in future periods. There is typically a macroprudential role for monetary policy, sometimes a dominant role, even when macroprudential policies are set optimally. But there are limits too. A monetary policy that focuses overly on financial stability loses control of inflation. |
| Keywords: | Macroeconomics, Incomplete Markets, Monetary Policy. |
| JEL: | D52 E32 E52 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:gla:glaewp:2024_12 |
| By: | Andres Blanco; Corina Boar; Callum J. Jones; Virgiliu Midrigan |
| Abstract: | We show that standard menu cost models cannot simultaneously reproduce the dispersion in the size of micro-price changes and the extent to which the fraction of price changes increases with inflation in the U.S. time-series. Though the Golosov and Lucas (2007) model generates fluctuations in the fraction of price changes, it predicts too little dispersion in the size of price changes and therefore little monetary nonneutrality. In contrast, versions of the model that reproduce the dispersion in the size of price changes and generate stronger monetary non-neutrality predict a nearly constant fraction of price changes. |
| Keywords: | Menu costs; Inflation; Fraction of price changes |
| Date: | 2024–09–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-76 |
| By: | Servaas Storm (Delft University of Technology) |
| Abstract: | Bernanke and Blanchard (2023) use a simple dynamic New Keynesian model of wage-price determination to explain the sharp acceleration in U.S. inflation during 2021-2023. They claim their model closely tracks the pandemic-era inflation and they confidently conclude that "we don't think that the recent experience justifies throwing out existing models of wage-price dynamics." This paper argues that this confidence is misplaced. The Bernanke and Blanchard is another failed attempt to salvage establishment macroeconomics after the massive onslaught of adverse inflationary circumstances with which it could evidently not contend. It misrepresents American economic reality, hides distributional issues from view, de-politicizes (monetary and fiscal) policy-making, and sets monetary policymakers up to deliver significantly more monetary tightening than can be justified on the basis of more realistic model analyses. |
| Keywords: | Inflation; science of monetary policy; output gap; unemployment gap; vacancy ratio; inflation expectations; wage-price spiral; non-linear Phillips curve. |
| JEL: | E0 E5 E6 E62 O23 I12 J08 |
| Date: | 2024–03–29 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp220 |
| By: | Laura Pilossoph; Jane M. Ryngaert |
| Abstract: | How do inflation expectations affect the job search behavior of workers when wages are set in nominal terms? A canonical job search model incorporating nominal wage rigidities implies that on-the-job search should increase and reservation wages should decrease with expected inflation. Higher inflation expectations therefore lead to more frequent job-to-job transitions. We show in a novel survey that workers search more under higher values of hypothetical inflation. In the Survey of Consumer Expectations, workers with higher inflation expectations have lower reservation wages and are more likely to search and to change jobs. The relationship between expected inflation and employer-to-employer transitions also appears in aggregate time series data. |
| JEL: | E31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33042 |
| By: | Javier Bianchi; Alisdair McKay; Neil Mehrotra |
| Abstract: | A persistent rise in rents has kept inflation above target in many advanced economies. Optimal policy in the standard New Keynesian (NK) model requires policy to stabilize housing inflation. We argue that the basic architecture of the NK model—that excess demand is always satisfied by producers—is inappropriate for the housing market, and we develop a matching framework that allows for demand rationing. Our findings indicate that the optimal response to a housing demand shock is to stabilize inflation in the non-housing sector while disregarding housing inflation. Our results hold exactly in a version of the model with costless search and quantitatively in a version with housing search costs calibrated to match US data on housing tenure, vacancy rates, and the size of the real estate sector. |
| Keywords: | Housing; Monetary policy; Stabilization policy; Inflation |
| JEL: | E24 E30 E52 |
| Date: | 2024–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedmwp:99022 |
| By: | Bianco, Danilo |
| Abstract: | This paper examines the heterogeneous impact of inflation on Spanish households between 2021 and 2023, focusing on differences by age and income. The aim is to evaluate how price increases unequally burden households and redistribute welfare across different population segments. The analysis is conducted through the "consumption channel, " which considers the effects of inflation based on the different consumption patterns of individuals. I use publicly available microdata to calculate household-specific inflation and to examine its composition. Then I run a linear regression analysis to explore the relationship between inflation and several other household characteristics. The results reveal how the main burden of inflation shifted from younger and lower-income households in 2021 and 2022, to older and wealthier households during the disinflationary period in 2023. Additionally, the study identifies consistent patterns that associate certain demographic characteristics with housing and food inflation over time. The findings contribute to the literature on inflation heterogeneity, demonstrating that the “inflation tax” does not affect all households equally and generates redistributional effects that merit consideration. |
| Keywords: | Inflation, Redistribution, Inflation Heterogeneity, Household-Specific Inflation, Consumption Channel, Microdata Analysis. |
| JEL: | D12 E21 E31 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122176 |
| By: | Xiaofeng Wang; Otaviano Canuto |
| Abstract: | The surprising victory of Javier Milei, the unconventional ‘anarcho-capitalist’ candidate, in the August primaries ahead of Argentina’s October 2023 general election, can be largely credited to his commitment to dollarize the Argentine economy, a move perceived as the ultimate solution to bring an end to the nation's economic turmoil. The potential shift from the local currency to the dollar has sparked concerns about Argentina's bilateral currency swap line with China. This swap line plays a crucial role in their bilateral relations and has also served as a means for Argentina to fulfill its debt obligations to the International Monetary Fund. The swap line is seen as a key element in preventing Argentina from defaulting on its IMF obligations, which is vital for both its economic and international financial stability. Given the significance of these developments, this article explores Argentina's potential shift towards dollarization and its implications for the country's relationship with China. It does so by assessing the critical role of the bilateral currency swap line between the Central Bank of Argentina (BCRA) and the People's Bank of China (PBOC) in backing Argentina's external payments. |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbecon:pb_39-23 |
| By: | Alvaro Silva |
| Abstract: | This paper studies inflation in small open economies with production networks. I show that production networks alter the elasticity of the consumer price index (CPI) to changes in sectoral technology, factor prices, and import prices. Sectors can import and export directly but also indirectly through domestic intermediate inputs. Indirect exporting dampens the inflationary pressure from domestic forces, while indirect importing increases the inflation sensitivity to import price changes. Computing these CPI elasticities requires knowledge of the production network structure because these do not coincide with typical sufficient statistics used in the literature such as sectoral sales-to-GDP ratios, factor shares, or imported consumption shares. Using input-output tables, I provide empirical evidence that adjusting CPI elasticities for indirect exports and imports matters quantitatively for small open economies. I use the model to illustrate the importance of production networks during the COVID-19–related inflation in Chile and the United Kingdom. |
| Keywords: | inflation; Small open economies; networks; input-output tables; COVID-19 |
| JEL: | C67 D57 E31 F14 F41 L16 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbwp:99025 |
| By: | António Afonso; José Alves; João Jalles; Sofia Monteiro; João Tovar Jalles |
| Abstract: | This study examines the effects of geopolitical risk and global uncertainty on energy prices, conditioned by different exchange rate regimes, for 185 economies over the period 1980-2023. The central question is how uncertainty impacts energy prices and whether exchange rate flexibility mediates these effects. Using panel data techniques, including OLS and Panel VAR, we assess both demand and supply-side channels, exploring country-specific differences. Our key findings indicate that uncertainty shocks significantly raise energy prices, particularly in countries with flexible exchange rates, where currency depreciation amplifies global price fluctuations. Asymmetric results are found regarding emerging markets, with flexible exchange rates, which tend to have lower energy prices, while oil-exporting countries and OPEC members experience distinct pricing dynamics. These results underscore the importance of exchange rate policy choices in shaping energy market responses to global shocks. Policymakers may need to adopt complementary measures to manage the volatility arising from global uncertainty. |
| Keywords: | geopolitical risk, world uncertainty index, global energy markets, exchange rate regimes, asymmetric effects |
| JEL: | C23 E44 G32 H63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11384 |
| By: | Garrón Vedia, Ignacio; Rodríguez Caballero, Carlos Vladimir; Ruiz Ortega, Esther |
| Abstract: | In a globalised world, inflation in a given country may be becoming less responsive to domestic economic activity, while being increasingly determined by international conditions. Consequently, understanding the international sources of vulnerability of domestic inflation is turning fundamental for policy makers. In this paper, we propose the construction of Inflation-at-risk and Deflation-at-risk measures of vulnerability obtained using factor-augmented quantile regressions estimated with international factors extracted from a multi-level Dynamic Factor Model with overlappingblocks of inflations corresponding to economies grouped either in a givengeographical region or according to their development level. The methodology is implemented to inflation observed monthly from 1999 to 2022 for over 115 countries. We conclude that, in a large number of developed countries, international factors are relevant to explain the right tail of the distribution of inflation, and, consequently they are more relevant for the vulnerability related to high inflation than for average or low inflation. However, while inflation of developing low-income countries ishardly affected by international conditions, the results for middle-income countries are mixed. Finally, based on a rolling-window out-of-sample forecasting exercise, we show that the predictive power of international factors has increased in the most recent years of high inflation. |
| Keywords: | Global inflation; Inflation vulnerability; Multi-level dynamic factor model |
| JEL: | E44 C32 C55 E32 O41 F44 F47 |
| Date: | 2024–11–04 |
| URL: | https://d.repec.org/n?u=RePEc:cte:wsrepe:44814 |
| By: | Kozo UEDA |
| Abstract: | This study investigates whether information provision on inflation influences household inflation expectations and actual spending in Japan. Using a randomized controlled trial with approximately 2, 500 bank account holders, I find that information provision significantly shapes inflation expectations, with respondents adjusting their expectations in line with the information received. However, this adjustment in expectations does not translate into changes in actual spending behavior, as observed through outflow transactions. These findings underscore the challenge of managing inflation expectations. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cnn:wpaper:24-021e |
| By: | Pierpaolo Benigno; Gauti B. Eggertsson |
| Abstract: | This paper reexamines the Phillips and Beveridge curves to explain the inflation surge in the U.S. during the 2020s. We argue that the pre-surge consensus regarding both curves requires substantial revision. We propose that the Inverse-L (INV-L) New Keynesian Phillips Curve replace the standard New Keynesian Phillips Curve. The INV-L curve is piecewise-linear and more sensitive to labor market conditions when it crosses the Beveridge threshold — a point at which the labor market becomes excessively tight and enters a "labor shortage" regime. We introduce a modified Beveridge curve that features a near-vertical slope once the Beveridge threshold is passed, suggesting that in this region, adjustment in labor market tightness occurs almost exclusively through a drop in vacancies rather than an increase in unemployment. This feature matches the U.S. experience since the Federal Reserve's tightening cycle began in March 2022. We also observe a similar pattern in the data during five other inflation surges over the past 111 years where the Beveridge threshold was breached. We define a Beveridge-threshold (BT) unemployment rate. Once unemployment falls below this rate, policymakers must be alert to sharp inflationary pressures from demand or supply shocks. We explore several policy implications. |
| JEL: | E0 E30 E40 E42 E44 E47 E49 E5 E51 E58 J20 J39 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33095 |
| By: | Mario Cerrato; Shengfeng Mei |
| Abstract: | Recently, Cooperman et al. (2023) show that the covariance of banks’ funding costs and credit lines draw-downs is debt overhang costs for the bank’s equity holders. In this paper, we empirically and theoretically study whether this cost can be mitigated by central banks’ quantitative easing. We focus on the COVID-19 shock. Based on Cooperman et al. (2023), we empirically f ind that funding costs generate frictions related to banks’ shareholders (debt overhang cost), and banks transfer that cost to the credit lines’ fees. However, our econometric analysis, event studies, and theory suggest and formalise why central banks’ quantitative easing (QE) can be crucial to mitigating that cost, thereby ensuring a cheaper supply of credit to the economy. Our f indings shed further light on the intricate relationship between banks’ funding costs and related debt overhang (Andersen et al. 2019), focusing on an important source of credit for firms: credit lines. |
| Keywords: | Quantitative Easing, Central Bank, Debt Overhang, Credit Line |
| JEL: | G01 G21 G28 G32 E44 E58 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:gla:glaewp:2024_05 |
| By: | Drydakis, Nick (Anglia Ruskin University) |
| Abstract: | This study utilised longitudinal data from Black History Month events in London from 2021 to 2023. Novel findings revealed that increased inflation and Bank Rates, related to the cost-of-living crisis, were associated with greater discrimination and deteriorations in both general and mental health for Black individuals. Moreover, it was found that during the cost-of-living crisis period, i.e., 2022-2023, discrimination was more adversely related to general and mental health deterioration compared to the period before the cost-of-living crisis, i.e., 2021. In addition, women, non-native individuals, non-heterosexual individuals, the unemployed, economically inactive individuals, those with lower educational attainment, and older individuals experienced higher levels of discrimination and reduced general and mental health compared to reference groups. The findings of the study contribute to the literature by demonstrating the intertwined associations of macroeconomic deteriorations and discrimination with the health of the Black community, and its subgroup differences, providing a basis for targeted policies. |
| Keywords: | Black community, health, mental health, discrimination, cost-of-living crisis, inflation rate, bank rate |
| JEL: | E31 E32 E43 I14 J71 J15 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17341 |
| By: | Pei Kuang; Michael Weber; Shihan Xie |
| Abstract: | We conduct a survey experiment with a large, politically representative sample of U.S. consumers (5, 205 participants) to study how perceptions of the U.S. Federal Reserve’s (Fed) political stance shape macroeconomic expectations and trust in the Fed. The public is divided on the Fed’s political leaning: most Republican-leaning consumers believe the Fed favors Democrats, whereas most Democrat-leaning consumers perceive the Fed as favoring Republicans. Consumers who perceive the Fed as aligned with their political affiliations tend to (1) have a more positive outlook on current and future economic conditions and express higher trust in the institution, (2) show greater willingness to pay for and are more likely to receive Fed communications, and (3) assign significantly more weight to Fed communications when updating their inflation expectations. Strong in-group favoritism generally amplifies these effects. Finally, if Trump were elected U.S. president, consumers would overwhelmingly view the Fed as favoring Republicans. The proportion of consumers viewing the Fed as an in-group would remain stable, but its composition would shift: Democrat-leaning consumers would see the Fed as less of an in-group, whereas more Republican-leaning consumers would perceive it in this way. Likewise, overall public trust in the Fed would remain steady, but trust among Democrat-leaning consumers would decline significantly, whereas it would rise among Republican-leaning consumers. |
| JEL: | D72 D83 D84 E31 E7 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33071 |