Monetary Economics http://lists.repec.org/mailman/listinfo/nep-mon Monetary Economics 2026-05-11 The Reservation Inflation of Hard Money: Gold-Standard Deflation and the Real Expansion of Nominal Claims, 1873-1896 https://d.repec.org/n?u=RePEc:arx:papers:2604.26248&r=&r=mon The original SCR theory proposed that inflation has two distinct expressions: circulation inflation, measured by rising transaction prices, and reservation inflation, measured by the rising real weight of monetary symbols, debt contracts, reserve claims, and other nominal stores of value relative to physical goods. A companion Japan paper tested one side of this theory by showing that, after money entered a reserve-dominant phase, monetary-base expansion no longer translated strongly into consumer-price inflation. This paper tests the other side of SCR: whether reservation inflation can arise when monetary issuance is constrained and circulation inflation is absent. The classical gold-standard deflation of 1873-1896 provides a clean historical setting. Using long-run British retail price data and the Minneapolis Fed historical U.S. CPI series, I show that the price level declined in both economies. Between 1873 and 1896, Britain's price index fell from 18.0 to 14.7, while the U.S. historical CPI fell from 36.0 to 25.0. Yet this deflation mechanically increased the real value of fixed nominal claims. A fixed-claim reservation index rose by 22.4% in Britain and 44.0% in the United States. Thus, the episode combines negative circulation inflation with positive reservation inflation. The result suggests that hard money does not abolish inflationary pressure in the SCR sense; it changes its domain of expression. Together with the Japan case, this paper supports a phase-dependent view of inflation in which CPI is only one observable expression of the monetary-material asymmetry. Ran Huang 2026-04 Monetary policy in the Euro Area, when Phillips curves ... are curves https://d.repec.org/n?u=RePEc:dnb:dnbwpp:861&r=&r=mon We study monetary policy in an environment where price and wage Phillips curves exhibit true curvature. To this end, we propose a New Keynesian model with endoge-nous adjustment of price and wage setting frequencies, moving beyond the quasi-linear structure of standard nonlinear NK Phillips curves. Using euro area data from 1999Q1 to 2024Q4, we estimate and simulate the non-linear model, analyzing the recent inflation surge and the implications of state-dependent prices and wages for monetary policy. Unlike conventional models, our framework does not attribute inflation dynamics pri-marily to exogenous supply shocks. Instead, the impact of shocks is asymmetric and de-pends on their timing, size, and the business cycle. Consequently, the inflation–output stabilization trade-off is state-dependent: monetary policy is more effective in curbing inflation, and supply shocks have larger effects during periods of high inflation. Guido Ascari Alexandre Carrier Emanuele Gasteiger Alex Grimaud Gauthier Vermandel New Keynesian Phillips Curve; non-linearity; inflation; monetary policy 2026-05 Monetary Policy According to Households: Perceptions, Reactions, and Channels https://d.repec.org/n?u=RePEc:iza:izadps:dp18591&r=&r=mon This paper studies how households perceive the transmission of monetary policy and how these perceptions affect their decisions. Using a large-scale survey of over 25, 000 U.S. households combined with randomized information treatments, we measure how households expect changes in the federal funds rate to affect economic conditions and their own behavior. Households report that higher interest rates lead them to reduce their spending, particularly on durable goods. However, the mechanisms underlying this response differ markedly from those in standard macroeconomic models. Respondents expect monetary tightening to raise borrowing costs and inflation. In turn, consumption function estimates identified using information treatments reveal that households respond to higher expected inflation by reducing consumption. Household inflation expectations also emerge as a central driver of portfolio reallocations following monetary policy changes. Grigoli, Francesco Sandri, Damiano Gorodnichenko, Yuriy Coibion, Olivier monetary policy transmission, household expectations, inflation expectations, consumption, portfolio choice, survey evidence 2026-04 Euroisation and the Bank Lending Channel of Monetary Policy: Evidence from Czechia https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/07&r=&r=mon We show that divergences between Czech and euro-area policy rates reshape the currency composition of corporate lending. Using loan-level data from AnaCredit for 2019–2024, we document that a widening PRIBOR–EURIBOR spread triggers a sharp reallocation toward euro-denominated credit, concentrated in new loans. The effect is asymmetric: strong when the differential widens, but only partially reversible when it narrows. It is driven mainly by large, less-capitalised banks and by larger, lower-leverage firms, while exchange-rate movements play virtually no role. These findings imply that persistent positive differentials weaken domestic monetary transmission and increase foreign-currency exposures, underscoring the need for macroprudential attention in small open economies with rising euroisation. Zuzana Gric Jan Janku Simona Malovana AnaCredit, bank lending, corporate credit, credit channel, euroization, monetary policy 2026-03 Social Media as a Monetary Policy Tool? Evidence from a Survey Experiment https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/04&r=&r=mon This article examines forms of direct monetary policy communication and their impact on inflation expectations and the public's perception of the central bank. To this end, an experiment was conducted in August 2024 with three groups of respondents representative of the Czech population, the first of which was exposed to a monetary policy statement, the second to a related Facebook post, and the third to no information. Respondents who were exposed to the above-mentioned texts significantly reduced their inflation expectations and the link between those inflation expectations and perceived current inflation. At the same time, their knowledge of the monetary policy of the Czech National Bank (CNB) improved somewhat. However, none of the groups of respondents changed their opinion on the CNB, with the exception of a slight improvement in the assessment of its communication in the case of the group exposed to the Facebook post. Josef Simpartl Inflation expectations, central bank, communication, social media, survey 2026-02 Exchange Rate Insulation Revisited https://d.repec.org/n?u=RePEc:ces:ceswps:_12635&r=&r=mon We confront the notion that flexible exchange rates insulate countries from external disturbances with new evidence for the euro area (EA) and 20 of its neighbors. Using high-frequency data, we first establish that countries with flexible exchange rates ("floats") let their currencies depreciate in response to EA monetary policy shocks, while "pegs" raise interest rates. Yet at business cycle frequency, these depreciations do not translate into insulation: floats contract just as much as pegs—not only in response to monetary policy shocks but also to other shocks originating in the EA. This result appears puzzling in light of received wisdom, but we show that it can be rationalized within a state-of-the-art HANK model and flesh out the underlying transmission channels. Giancarlo Corsetti Keith Kuester Gernot J. Müller Sebastian Schmidt Ben Schumann Gernot Müller exchange-rate regime, Insulation, external shock, exchange-rate disconnect, monetary policy 2026 A phase transition in monetary function explains expansion without inflation https://d.repec.org/n?u=RePEc:arx:papers:2604.24035&r=&r=mon Large monetary expansions do not necessarily generate consumer-price inflation, challenging scalar views of "money supply." Here we propose that monetary function is phase-dependent: newly issued base money can occupy distinct functional compartments with different coupling to prices. Starting from an accounting framework that separates reproduction, consumption, and reservation, we operationalize a measurable order parameter, phi=RB/MB, the reserve-share fraction of the monetary base. Using Japan's monthly record (1971-2026), we identify a compositional phase transition after 2013 from a cash-dominated to a reserve-dominated regime, quantitatively captured by a Landau-type order-parameter transition. Phase-conditional local projections using unexpected (residual) base-growth shocks show that, in Japan, unexpected base expansions are absorbed primarily as reserve balances-phi rises significantly-rather than entering the consumption-goods transaction sector; consequently, the core CPI inflation response is strongly attenuated and can even reverse sign. This demonstrates that increases in monetary supply do not necessarily cause inflation: the key is the "phase" in which incremental money accumulates (reservoir versus circulation). We further define function-specific efficiencies for reservation absorption and CPI transmission and provide an operational distinction between circulation-driven and reservation-dominant inflation regimes. Ran Huang 2026-04 International Spillovers from Euro Area Monetary Policy to Advanced Small Open Economies: Investment Behavior of Czech Firms https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/05&r=&r=mon The paper examines international spillovers of euro area (EA) monetary policy to the real economy of an advanced small open economy with a high degree of credit euroization and close trade links with the EA. We focus on Czechia, as it has a similar degree of trade and financial integration with the EA as the rest of the non-EA countries in the region. Based on firm-level data and high-frequency identified monetary policy shocks, we assess the channels of EA monetary policy spillovers. More precisely, we estimate the responses of investment by Czech firms to EA monetary policy shocks using panel local projections and compare the responses for various groups of firms. The results suggest the presence of the trade channel of spillover transmission. Some evidence is found for the balance sheet channel. The foreign currency borrowing cost channel is detected after 2014, suggesting that the high degree of credit euroization in Czechia has altered the transmission of spillovers of EA monetary policy. Importantly, the overall spillovers from the EA have weakened significantly since 2014. Volha Audzei Michal Franta Credit euroization, Investment of firms, Small open economy, Transmission channels 2026-03 Inflation expectations the impact of priming in survey questions https://d.repec.org/n?u=RePEc:rbz:wpaper:11103&r=&r=mon Inflation expectations surveys are an essential tool for monetary policy, especially within an inflation-targeting policy framework. Hanjo Odendaal Monique Reid Pierre Siklos 2026-05-06 The emergence of wage-price spirals: Implications for Monetary Policy Response https://d.repec.org/n?u=RePEc:gii:giihei:heidwp13-2026&r=&r=mon This paper examines the interaction between nominal wage dynamics and consumer price inflation in Uzbekistan, with the aim of assessing the risk of wage-price spirals in an emerging market context. Using quarterly data covering the period from 2007 to 2025, the analysis investigates whether wage and price developments reflect self-reinforcing feedback mechanisms or primarily capture compensatory adjustments driven by external and institutional factors. The empirical framework combines cointegration analysis, conditional Granger causality tests, and a vector error correction model (VECM), complemented by impulse response functions to characterise the dynamic transmission of wage and price shocks. The results establish the presence of a stable long-run equilibrium between wages and prices, with adjustment operating exclusively through wages rather than prices. Granger causality tests reveal a clear unidirectional pattern: consumer prices drive nominal wages, while wages do not feed back into prices in either the short or long run. Impulse response analysis confirms that wage shocks generate only a moderate and gradual price response, whereas price shocks produce a persistent wage adjustment consistent with compensatory indexation. These findings do not support the existence of a self-sustaining wage-price spiral in Uzbekistan. Instead, wage dynamics appear to reflect institutionally driven responses to inflation, shaped by centralized public-sector wage setting, while exchange rate pass-through emerges as the dominant driver of price dynamics. Mushtariy Boymatova wage-price spirals; inflation; wages; Granger causality; pass-through; VECM 2026-04-28 Measuring Inflation Shock Momentum https://d.repec.org/n?u=RePEc:fip:fedfwp:103112&r=&r=mon We develop a non-parametric filter that identifies sustained directional runs in shocks to monthly inflation—a concept we define as “inflation shock momentum.” By assessing the shocks to over 100 disaggregated Personal Consumption Expenditures (PCE) inflation categories, we isolate the share of categories experiencing positive or negative inflation shock momentum in a given month. We define the “Inflation Shock Momentum” (ISM) index as the net positive momentum share of expenditure-weighted categories (positive minus negative) in a given month. We show that the ISM index helps to forecast aggregate PCE inflation at horizons of 1 to 3 years, even after controlling for a variety of other inflation predictor variables. The ISM index is particularly useful in capturing emerging disinflationary pressure and can be used to help forecast future inflation movements in real time. Kevin J. Lansing Adam Hale Shapiro PCE Inflation; Non-parametric filter; Forecasting 2026-04-30 Monetary Policy Transmission in an Emerging Market: The Financial-Friction Channel VS The Interest-Rate Channel https://d.repec.org/n?u=RePEc:aoz:wpaper:394&r=&r=mon We provide the first micro-level evidence on the mechanisms through which monetary policy transmits in an emerging market. Using high-frequency identification and a dataset covering over 10 million firm-month bank-loan observations, we move beyond only documenting policy effects to identify the transmission itself in Mexico. Credit falls earlier, more sharply, and persistently for young firms, SMEs, and firms with recent delinquencies, consistent with a financial-frictions channel. Credit to durable-goods producers also declines more, consistent with an interest-rate channel. However, unlike the pattern documented for advanced economies, the financial-frictions channel dominates. Further evidence suggests that this dominance extends to employment growth. Lorenzo Menna Martín Tobal Alejandro Werner monetary policy, financial frictions, emerging markets; credit growth; bank capitalization 2026-04 Daily Inflation Expectations in Japan around the Time of Regime Change https://d.repec.org/n?u=RePEc:cfi:fseres:cf624&r=&r=mon We analyze how household inflation expectations respond to macroeconomic news using a daily survey in Japan in 2023-24, around the transition from a low- to high-inflation regime. The responses of inflation expectations vary widely across news events. responses of inflation expectations to news are sometimes correlated with surprise components of the news implied by private-sector inflation forecasts or financial markets. Long-run inflation expectations are no less responsive to inflation data releases—but are less responsive to monetary policy announcements—than short-run inflation expectations. Taisuke Nakata Yoshiyuki Nakazono Kento Tango 2026-04 From Micro Filters to the Macro Slope https://d.repec.org/n?u=RePEc:ces:ceswps:_12638&r=&r=mon Sticky-price firms do not merely underreact to ambiguous competitor prices — they actively lean against them. Above an inflation threshold, signals clear and firms reverse to follow. Existing information-friction models restrict weights between zero and one, ruling out this negative pass-through. I show it reflects signal extraction from a public sufficient statistic — the sectoral price index — which collapses the Townsend (1983) hierarchy of beliefs. The Phillips curve separates: the expectations channel is state-dependent, the cost channel is not. Six million UK price observations confirm this asymmetry, delivering a state-dependent Phillips curve with an inflation dependent slope. Engin Kara higher-order beliefs, public signals, Phillips curve, price setting, information frictions, common knowledge 2026 Revisiting Shadow Short-term Interest Rate Models: Evidence from the Ultra-Low Interest Rate Environment in Japan https://d.repec.org/n?u=RePEc:ime:imedps:26-e-06&r=&r=mon Shadow short-term interest rate (SSR) models are expected to provide effective monetary policy indicators under the effective lower bound (ELB) constraint on nominal interest rates. This paper revisits the SSR models using yield curve data from the prolonged ultra-low interest rate environment in Japan. Specifically, this paper compares the various specifications of the SSR models based on the Nelson-Siegel model by focusing on a trade-off between estimation performance and theoretical consistency. This paper highlights the importance of evaluating monetary policy easing effects using the entire yield curve fluctuations, rather than relying solely on SSR estimates, especially in the ultra-low interest rate environment in Japan. Hiroyuki Oi Shigenori Shiratsuka Shunichi Yoneyama Effective lower bound constraint, Shadow short-term interest rates, Nelson-Siegel model, Monetary policy indicators 2026-03 RSDM: The Consensus Honest Money in the AI Era https://d.repec.org/n?u=RePEc:arx:papers:2605.00340&r=&r=mon The medium of exchange of the traditional economy is mainly the fiat currency of each country or region, and when cross-border transactions occur, they need to be settled according to the exchange rate. In the AI world, however, the medium of exchange tends to be a globally recognized currency. Especially when AI acts as an agent for cross-border capital pool and cross cyclical asset allocation, it needs a sound money that can resist the depreciation of fiat currency and store long-term value. Therefore, we propose a globally consensus and universally accepted monetary rule framework for the AI era. The devaluation of money runs through almost the whole process of history, from the weight reduction and purity decrease of metallic coin to the unanchored over-issuance of paper currency. Whether it is the periodic compulsory recoinage in medieval Europe or Gesell's stamp scrip, both are essentially mechanisms for taxing money holdings. Unlike Gesell's stamp scrip, Redeemable Self-Decaying/Devaluing Money (RSDM) is a tokenized commodity money. Its essential innovation is to fill the hole in the storage fee of metal coins through the self-devaluing of metal weight recorded on the deposit certificate (warehouse receipt) of metal coins. In a sense, RSDM is an innovative version of Jiaozi (a deposit receipt for base metal coin that emerged in Sichuan, China, about a thousand years ago). In this paper, we propose five forms of online and offline issuance of RSDM, providing a prototype for creating a globally recognized modern honest money. Boliang Lin Ruixi Lin 2026-04 De-dollarization in the Democratic Republic of Congo: A 25-Year Retrospective and a 25-Year Prospective on Usage, Market Depth, and Monetary Credibility https://d.repec.org/n?u=RePEc:hal:journl:hal-05229895&r=&r=mon This paper investigates the dynamics of de-dollarization in the Democratic Republic of Congo (DRC), exploiting the 2024 monetary reforms as quasi-exogenous shocks observable in both regulatory texts and payment practices. Three key findings stand out. First, by opening the "black box" of payments—POS, ATS, and mobile money—we provide evidence of increased use of the Congolese franc and incipient substitution away from foreign currency deposits. Second, econometric tests (event studies, difference-in-differences, local projections) identify a sharp break in price transmission: exchange rate pass-through to inflation declines significantly from the second quarter of 2024. Third, forward-looking simulations (2025–2050) demonstrate that only strict and sustained reform execution, combined with deepening domestic financial markets (yield curve in CDF, collateral, Treasury securities), can achieve a durable reduction in dollarization (−9.5 percentage points) and a contraction in pass-through of nearly 40%. These findings underscore that de-dollarization is not decreed but built: through repeated and credible usage of the national currency, anchored in market depth and institutional credibility. Beyond the Congolese case, this study contributes to global debates on dollarized regimes, providing new insights into how resource-rich emerging economies can reconstruct monetary credibility and restore effective policy transmission. Randy Moise Kambana Gaël Ngongo Exchange-rate pass-through, Financial dollarization, Monetary policy, De-dollarization, Payment systems, POS (point-of-sale) terminals, CDF yield curve, Local currency (CDF) 2025 Democratic Sovereignty and the Prerogative to Make Money: The Case of the Federal Reserve https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp247&r=&r=mon The surge of executive power unleashed by the Supreme Court has reached the Federal Reserve, provoking a crisis that the justices seem suddenly anxious to avoid. But the drama is long overdue. The central bank has a constitutional stature that poses a direct challenge to unitary executive theory, the principle animating the Court's recent case law. Congress established the Federal Reserve System to carry out a critical legislative prerogative, making the sovereign money supply. Congress used an institutional form, national banking, innovated precisely to secure sovereign money-making from executive (originally monarchical) interference. Congress in turn assigned a vital responsibility, the capacity to make money out of debt in the people's name, to the Fed. The constitutional conclusion follows: Congress's prerogative over money-making clearly secures the Fed's independence from presidential interference. That conclusion is lost in current scholarship that treats the Fed as fundamentally like other independent agencies. The Court has assumed, similarly, that the unitary executive presides over a relatively homogeneous regulatory field. The case of the Fed exposes the separation of powers as a more complicated project. Legislatures built democratic sovereignty by struggling for prerogatives that, like money-making, protected their lawmaking authority. The prerogatives claimed by Congress inform the work of each agency and official, including within the executive branch. The Court dismantles democratic sovereignty when it denies the reach of those prerogatives. Christine Desan Federal Reserve; central bank independence; money creation; democratic sovereignty; legislative prerogative; Congress; unitary executive theory; separation of powers; constitutional political economy; monetary architecture 2026-03-29 Reassessing Proxy-based Identification of Multiple Monetary Policy Shocks for the Euro Area, the US, and the UK https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2163&r=&r=mon Several recent studies consider a set of proxies to identify different monetary policy shocks for different regions in the world. We show that the way the proxies are used to identify the monetary policy shocks may lead to correlated shocks and dubious structural analysis and we demonstrate how to overcome the problem of correlated shocks. We illustrate that, if correlated shocks are used in applied studies, key statistics of interest such as impulse responses and forecast error variance decompositions can be severely distorted and we consider benchmark studies on monetary policy in the euro area (EA), the US and the UK to demonstrate the problems. Martin Bruns Helmut Lütkepohl James McNeil Structural vector autoregression, proxy VAR, GMM, correlated structural shocks 2026 AI-Based Forecasting of Czech Inflation: Quantile Regression Forests with Dynamic Weights https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/09&r=&r=mon We construct a quantile regression forest for inflation forecasting in the Czech Republic, inspired by growing literature on the use of Machine Learning in macroeconomics and finance. We contribute to the literature by implementing an optimisation scheme with time-varying weights that incorporates information from the entire distribution to form the point forecast. By dynamically reflecting the distribution of future inflation paths, our framework outperforms both standard mean and median point forecasts and delivers gains relative to conventional linear benchmark models. We also forecast individual inflation subcomponents that enable us to disentangle the drivers of future inflation and its risks. Furthermore, we integrate the Shapley-value decomposition to enhance the interpretability of our results and adjust the model's predictors for a small open economy. Filip Blaha Jan Botka Josef Sveda Ales Michl Czech Republic, forecasting, inflation, machine learning, quantile regression forest, small open economy, time varying weights 2026-04 Bank Loans, Trade Credit and Export Prices: Evidence from Exchange Rate Shocks in China https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/084&r=&r=mon This paper examines the impact of trade credit and bank loans on firms’ exchange rate passthrough. Using a comprehensive dataset combining customs transaction records and balance sheet data for Chinese exporters during 2000–2011, we document that firms that more intensively extend trade credit to their buyers exhibit more complete exchange rate pass-through. Further empirical investigation sheds light on the underlying mechanism. First, the use of trade credit is positively correlated with exporters’ dependence on bank loans. Second, firm-level bank loan interest rates decline following home currency depreciation. Motivated by these findings, we develop a theoretical model in which exporters constrained by working capital simultaneously extend trade credit to buyers and rely on bank borrowing. The model shows that home currency depreciation improves exporters’ profitability, lowers default risk, and reduces borrowing costs, ultimately enhancing exchange rate pass-through. By endogenizing the interest rate through firm-level default risk, the model reveals a novel channel through which firms’ financial activities shape the dynamics of exchange rate pass-through. George Cui Xiaosheng Guo Leticia Juarez Exchange rate pass-through; Trade credit; Financial constraints 2026-04-24 Households' Inflation Expectations and Consumption in Macroeconomic Models: A Negative Real Income Channel https://d.repec.org/n?u=RePEc:cnb:wpaper:2026/06&r=&r=mon While the standard New Keynesian model implies that higher households' inflation expectations strongly raise nominal wage expectations and generate a positive consumption response, empirical evidence shows low passthrough to nominal wage expectations and a mixed sign of the consumption response. I study representative agent and heterogeneous agent New Keynesian models that allow for this low passthrough, arising from myopic nominal wage expectations. In the representative agent model, consumption still increases because households receive profits that offset the expected decline in real wages. In contrast, in the heterogeneous agent model, the consumption response becomes negative when the profit channel is weakened and the disconnect between inflation and nominal wage expectations is sufficiently strong. Frantisek Masek Inflation Expectations, Consumption, Heterogeneous Agents 2026-03 Affordability of cash: From stocktaking to why and how https://d.repec.org/n?u=RePEc:zbw:hawdps:340843&r=&r=mon This paper analyzes the affordability of cash in an international context. After outlining why cash should remain a core component of a diversified payment mix within a resilient and efficient payment system, we discuss methodological challenges associated with measuring the costs of payment instruments and explain why consumers should ultimately be at the center of the analysis. The paper then reviews the existing literature on the costs of payment instruments and subsequently traces the cost structure across the entire cash cycle-from printers and mints to central banks, cash-in-transit companies, commercial banks, ATM operators, and merchants. Finally, we examine the regulatory frameworks, including cash usage limits and reporting requirements, and analyze their implications for cash demand and the sustainability of cash infrastructure. Building on these findings, the paper derives policy implications and practical recommendations for regulators and cash-cycle participants, emphasizing the need to keep cash affordable. Rösl, Gerhard Seitz, Franz Cash, payments, costs, cash cycle, affordability 2026 Beyond neutrality: Uncovering the sectoral and distributional consequences of monetary policy in the Nordic countries https://d.repec.org/n?u=RePEc:zbw:cessdp:340842&r=&r=mon While mainstream macroeconomics has long treated distributional issues as secondary, often dismissing them as outside the purview of monetary policy, the post-Keynesian tradition emphasizes that income distribution, financial positions, and class dynamics are central to understanding macroeconomic outcomes. Drawing on this rich theoretical framework, this paper empirically investigates the distributive and sectoral consequences of monetary policy, an important but often neglected area within post-Keynesian empirical research. Using data for three Nordic countries (Denmark, Sweden, and Finland), we provide empirical evidence on how contractionary monetary policy shocks propagate through functional income shares, compress private demand, and reconfigure financial balances of the institutional sectors. Our paper bridges the gap between post-Keynesian theoretical insights and the empirical rigour essential in policy development. The results show that interest rate changes are not only non-neutral but fundamentally distributive, systematically redistributing income and reshaping balance sheets. Khawaja, Jawad Raza, Hamid Monetary Policy, Income Distribution, Sectoral Balances, Financialization 2026 Survey design and professional forecasters: The case of uncertainty in the US SPF https://d.repec.org/n?u=RePEc:zbw:zewdip:340840&r=&r=mon Histogram forecasts of inflation and growth from the US Survey of Professional Forecasters (SPF) allow for an assessment of the evolution of forecast uncertainty. However, this assessment is complicated by structural breaks in measured uncertainty arising from changes in histogram bin widths over time. The existing literature typically does not take these breaks into account. We propose a break adjustment based on the insights provided by a structural break in 2014, during which bin widths-and consequently, measured inflation uncertainty-shifted significantly, despite true inflation uncertainty remaining virtually constant. Drawing on our results, we propose horizon-specific bin widths for inflation and growth to align measured uncertainty more closely with underlying uncertainty. Knüppel, Malte Pavlova, Lora survey forecasts, volatility, structural breaks 2026 Beyond borders, within societies: inequality and the global transmission of US monetary policy https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263221&r=&r=mon This paper provides novel evidence on how income inequality shapes the heterogeneity of US monetary policy spillovers to GDP across foreign economies. Using state-dependent local projections and exploiting variation in disposable income inequality across 87 countries over 1966-2020, we show that household heterogeneity influences how foreign GDP responds to a US monetary tightening. GDP contracts up to one and a half times more when inequality is above average. However, while higher inequality amplifies negative spillovers in advanced economies, it mitigates them in emerging markets. To rationalise this finding, we use a three-country open economy Two-Agent New Keynesian (TANK) model, which suggests this divergence is driven by differences in participation in international financial markets. Households in emerging markets face greater barriers to international investment, limiting their ability to re-balance portfolios towards higher-return foreign bonds after the shock. JEL Classification: D31, E21, E52, E58, F42 Arrigoni, Simone Ferrari Minesso, Massimo income inequality, local projections, spillovers, state-dependence, US monetary policy 2026-05 The Puzzle of a Missing Wage‐Price Spiral: Experimental Evidence on Inflation Expectations and Labor Supply https://d.repec.org/n?u=RePEc:tcd:tcduee:tep0926&r=&r=mon We study how workers form inflation expectations and incorporate them into labor supply decisions using experimental evidence from the U.S. online labor market. Exploiting exogenous variation from randomized information provision, we find that higher price inflation expectations do not raise reservation wages. Instead, workers lower reservation wages for multiperiod contracts, even after controlling for wage growth and unemployment expectations. These patterns are consistent with a labor search model where higher inflation expectations reduce the perceived value of future job offers, increase income risk, and induce a precautionary reduction in reservation wages. Overall, the findings suggest limited risk of wage‐price spirals. Chaewon Baek Vitaliia Yaremko inflation expectations; cross-learning; labor supply; wage-price spiral; randomized control trial 2026-04 Mind the Gap When Exiting Low-for-Long https://d.repec.org/n?u=RePEc:ime:imedps:26-e-02&r=&r=mon Prolonged low interest rates can be stimulative while leading agents to believe rates will remain lower for longer than central banks intend. When rates rise, however, agents may perceive this as surprise tightening, causing economic contraction. To articulate this unintended effect, this paper develops a New Keynesian model with learning and forward guidance. It finds that prolonged low rates lower agents' perceived nominal neutral rate, and the correction of their belief during rate hikes precipitates economic downturns. Low credibility about forward guidance amplifies this impact. Empirical support is provided by estimating a perceived monetary policy rule using professional forecast data. Wataru Hagio Daisuke Ikeda Koji Takahashi Keisuke Yoshida Low-for-long interest rates, learning, neutral nominal rates, forward guidance, imperfect credibility 2026-02 Towards a Macroeconomic Model of Banking Crises https://d.repec.org/n?u=RePEc:ime:imedps:25-e-17&r=&r=mon Banking crises are infrequent macroeconomic events with the potential to inflict significant and lasting harm on the real economy. Drawing from the empirical literature, this paper highlights five facts on banking crises from a macroeconomic perspective. It conducts a targeted review of the literature on financial frictions and banking crises in a dynamic general equilibrium framework, and introduces a dynamic general equilibrium model of bank runs. The model's ability to account for the five facts is examined, alongside its implications for policy. Finally, the paper explores the challenges of integrating macroprudential policy into the model. Daisuke Ikeda Hidehiko Matsumoto Banking crises, macroeconomic models, macroprudential policy 2025-12 Decomposing Loan Rate Dispersion in the Interbank Market https://d.repec.org/n?u=RePEc:ime:imedps:26-e-04&r=&r=mon This paper decomposes loan rate dispersion in the interbank loan market. Using transaction-level data, we documented dispersion in uncollateralized overnight loan rates even during periods of low interest rates in Japan. Applying the AKM model, we quantified the contributions of borrower and lender heterogeneity to loan rate dispersion. Lender heterogeneity accounted for approximately three times more dispersion than borrower heterogeneity. The contribution of borrower heterogeneity exhibited a downward trend over time. Positive assortative matching along borrowers' and lenders' average loan rates was observed. For term loans, borrower heterogeneity accounted for a larger share of loan rate dispersion than did overnight loans. Masayuki Okada interbank loans, loan rate dispersion, AKM model, over-the- counter market, bank heterogeneity 2026-03 Comparing the FOMC’s Estimate of R-Star with Alternative Estimates https://d.repec.org/n?u=RePEc:fip:l00001:103131&r=&r=mon The neutral real interest rate—also called r-star—is the theoretical rate prevailing when maximum employment and 2% inflation are reached. How is this 'unobservable' rate estimated? Kevin L. Kliesen neutral real interest rate; r-star 2026-05-04 Property, Interest, and Money: Is Heinsohn and Steiger's Property Premium a Determinant of Interest? https://d.repec.org/n?u=RePEc:arx:papers:2604.24489&r=&r=mon Heinsohn and Steiger's "Eigentum, Zins und Geld" (1996) proposes the property premium as the foundational determinant of interest, replacing time preference. This paper examines whether the replacement succeeds. It does not. The two arguments against time preference, the savings-inelasticity claim after Hahn and the portfolio-shift claim after Keynes, both fail on standard microeconomic grounds. With time preference intact, the property premium sits within the standard decomposition of the interest rate. In ordinary collateralized credit it coincides with the risk premium. Only when the lender is a money-issuing bank with a real redemption obligation does a third term enter the decomposition that standard asset-pricing theory does not articulate. That third term is Heinsohn and Steiger's genuine contribution. The paper discusses its apparent disappearance or disguised operation after 2008, and the circularity of a property anchor measured in money. Eric Hillebrand 2026-04 Flight to Safety: Evaluating Stablecoin’s Role as a Safe-Haven Asset in DeFi Markets https://d.repec.org/n?u=RePEc:fip:fedpwp:103156&r=&r=mon This study examines the impact of the stablecoin Tether (USDT) on systemic liquidity across the Ethereum and Bitcoin markets, utilizing an event study approach that integrates on-chain wallet data, pricing, and financial metrics. By analyzing cryptocurrency market responses to key protocol and market-moving events, augmented by nonlinear volatility models, we identify distinct, chain-specific flight-to-safety behaviors. Our results show that USDT acts as a primary liquidity lifeline for Ethereum holders during stress, particularly among retail investors, whereas its role for Bitcoin holders is more muted and stabilizing. Notably, we find stronger flight-to-safety evidence in Wrapped Bitcoin (Ethereum-based) than in native Bitcoin, highlighting that USDT’s function is network dependent. These findings imply that effective regulatory frameworks must be differentiated, accounting for chain-specific liquidity, investor composition, and risk dynamics, as a uniform approach would likely be systematically miscalibrated. Alan Chernoff Julapa Jagtiani Nathaniel Yoshida Cryptocurrency; Stablecoins; Bitcoin; Ethereum; Tether; Flight to safety; BTC; ETH; USDT 2026-05-07 Capital Flows to Emerging Markets: Disentangling Quantities from Prices https://d.repec.org/n?u=RePEc:aoz:wpaper:393&r=&r=mon We study the joint dynamics in the volume and prices of capital flows to emerging market economies (EMEs). A dynamic factor model augmented with sign and zero restrictions allows us to identify demand/supply shocks of idiosyncratic/common nature. While common credit supply shocks are the main driver of prices, idiosyncratic credit demand and supply shocks account for most of the variation in quantities. A structural multi-country SOE/RBC model is calibrated to EMEs data to further shed light on the main transmission channels. Augmented with correlated productivity and interest rate shocks, the model matches the comovement between prices and quantities as well as business cycle moments. Common credit demand drivers, captured as correlated TFP shocks, account for around half of the observed comovement in quantities but they are not a significant driver of price comovement. Fundamentals matter significantly more for capital flows than for country spreads, which are driven by a sizeable global financial cycle. Andrés Fernández Alejandro Vicondoa capital flows, sovereign spread, small open economy, credit supply, credit demand, external factors 2026-04