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Tag Archives: Academic research & research papers

Managing a New Policy Framework: Paul Volcker, the St. Louis Fed, and the 1979-82 War on Inflation

Kevin Kliesen and David Wheelock in this paper look at how Federal Reserve and Volcker managed to lower inflation in 1979-82 period: In October 1979, Federal Reserve Chairman Paul Volcker persuaded his Federal Open Market Com­mittee (FOMC) colleagues to adopt a new policy framework that (i) accepted responsibility for controlling inflation and (ii) implemented new operating procedures to control the growth of monetary aggregates in an effort to restore price stability. These moves were...

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The rise of digital watchers vs pocket watchers

Till Ebner, Thomas Nellen and Jörn Tenhofen of SNB in this paper have an interesting take on pocket watchers vs digital watchers: Many consumers use payment instruments to control their budget. Previously, such behavior has been associated with checking disposable cash (“pocket watching”). Based on recent survey data, we show that “digital watchers” have emerged, i.e., noncash payers who use digital applications to control their budget. Both watcher types have distinct characteristics....

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No-fault Default, Chapter 11 Bankruptcy, and Financial Institutions

Robert Merton & Richard T. Thakor in the new NBER research: This paper analyzes the costs and benefits of a no-fault-default debt structure as an alternative to the typical bankruptcy process. We show that the deadweight costs of bankruptcy can be avoided or substantially reduced through no-fault-default debt, which permits a relatively seamless transfer of ownership from shareholders to bondholders in certain states of the world. We show that potential costs introduced by this...

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History of Machine Learning in Finance and Economics

Derek Snow in this piece: Finance and Economics have been slow to adopt modern machine learning techniques. Nevertheless, the researchers and practitioners in these respective domains have been essential in laying the bedrock of what we now refer to as machine learning. The use of mathematics in the service of social and economic analysis dates back to the 17th century. Then, mainly in German universities, a style of instruction emerged which dealt explicitly with the detailed...

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Why the era of low inflation could last for 50 years?

Lord Meghnad Desai in this OMFIF piece: Have we entered an era of zero or even negative inflation? If so, what are the reasons and how long will it last? Certainly, the link between government borrowing and inflation is broken. Is this low inflation phase an exception or is it the new ruling financial environment? I am going to stick my neck out and say it will last for 50 years. The elements of the low inflation economy have been maturing over the last 50 years – since the collapse of...

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The rise and sudden decline of North Carolina furniture making

John Mullin in this new Richmond Fed research article: It happened so quickly. In just 10 years, between 1999 and 2009, North Carolina’s furniture manufacturing industry lost more than half of its jobs. The chief culprit was increased competition from lower-cost furniture imported from Asia — mostly China. The U.S.-China Bilateral WTO Agreement, signed in November 1999, had opened the door to Chinese imports by lowering U.S. tariff barriers and easing the way for China to join the World...

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RBI’s Occasional Paper Series available online since their start in 1976

This bog has been pointing out how RBI’s website has loads of historic information, reports, databases and so on. RBI has put up its Annual Reports, Banking data, RBI’s several Reports and Trend and Progress of Banking since 1949. I just discovered RBI has put up its Occasional Paper Series as well. The first series started in 1976. The way to figure the archive is the same. Click on All Volumes and Issues on the left tab. Again click on the link Occasional Papers – All Volumes and...

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The Political Effects of Immigration: Culture or Economics?

Late Prof Alberto Alesina and Prof Marco Tabellini of HBS in this paper: We review the growing literature on the political effects of immigration. After a brief summary of the economics of immigration, we turn to the main focus of the paper: how immigrants influence electoral outcomes in receiving countries, and why. We start from the “standard” view that immigration triggers political backlash and raises support for nativist, anti-immigrant political parties. We present evidence from a...

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The comeback path for DFIs is strewn with strategic challenges

Niranjan Rajadhyaksha of Cafe Economics in this new Mint piece: Are development finance institutions (DFIs) about to make a comeback in the Indian financial landscape? The first hint was offered by finance minister Nirmala Sitharaman in her July 2019 budget speech. She spoke about the need for a specialist DFI to channel funds to the ₹1 trillion of infrastructure projects planned over the next five years. Not much happened after that. Then K.V. Kamath, who led the successful transition...

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Pandemic creates a new economic channel: scarring effect

Julian Kozlowski of St Louis Fed in this research article introduces a new channel which impacts economic activity – scarring effect. What are the long-run economic costs of COVID-19? While the virus will eventually pass, an event of this magnitude could leave lasting effects. A shift in confidence and fear could prevent firms and consumers from rebounding to their old investment and spending habits. A recent paper (Kozlowski, Veldkamp, and Venkateswaran, 2020a) formalizes this...

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