Annual Conference

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International Macroeconomics, Money & Banking

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May 2016

Lender of Last Resort versus Buyer of Last Resort - The Impact of the European Central Bank Actions on the Bank-Sovereign Nexus

Viral V. ACHARYA, Diane PIERRET, Sascha STEFFEN
In summer 2011, elevated sovereign risk in Eurozone peripheral countries increased the solvency risk of Eurozone banks, precipitating a run on their short-term debt. We assess the effectiveness of different European Central Bank (ECB) interventions that followed – lender of last resort vs. buyer o...
Keywords: Money market funds, repos, bank risk, sovereign debt, ECB
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2016

International Transmissions of Monetary Shocks: Between a Trilemma and a Dilemma

Shang-Jin WEI, Xuehui HAN
This paper re-examines international transmissions of monetary policy shocks from advanced economies to emerging market economies. In terms of methodologies, it combines three novel features. First, it separates co-movement in monetary policies due to common shocks from spillovers of monetary polici...
Keywords: Interest rate shocks, Fixed exchange rate, Flexible exchange rate, dilemma, trilemma, Capital flow management
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2016

Declining Trends in the Real Interest Rate and Inflation: Role of Aging

Shigeru FUJITA, Ippei FUJIWARA
This paper explores a causal link between aging of the labor force and declining trends in the real interest rate and inflation in Japan. We develop a New Keynesian search/matching model that features heterogeneities in age and firm-specific skills. Using the model, we examine the long-run implicati...
Keywords: aging, natural rate, deflation, Japan
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2016

A Macroprudential Stable Funding Requirement and Monetary Policy in a Small Open Economy

Punnoose JACOB, Anella MUNRO
The Basel III net stable funding requirement, scheduled for adoption in 2018, requires banks to use a minimum share of long-term wholesale funding and deposits to fund their assets. This paper introduces a stable funding requirement (SFR) into a small open economy DSGE model featuring a banking sect...
Keywords: DSGE models, prudential policy, monetary policy, small open economy, sticky interest rates, Banks, wholesale funding
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AMPF Papers

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Commissioned Paper

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May 2016

Currency Wars, Coordination, and Capital Controls

Olivier BLANCHARD
The strong monetary policy actions undertaken by advanced economies’ central banks have led to complaints of currency wars by some emerging market economies, and to widespread demands for more macroeconomic policy coordination. This chapter revisits these issues. It concludes that, while advanced ...
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