/pdf/methods-of-policy-accommodation-at-the-interest-rate-lower-5d59gvepsi.pdf

Methods of Policy Accommodation at the Interest-Rate Lower Bound

評＂The New Geography of Jobs＂

This paper analyses the effects of the European Central Bank's expanded asset purchase programme (APP) on yields and on the macroeconomy, and sheds some light on its transmission channels. It shows, first, that the January 2015 announcement of the programme has significantly and persistently reduced sovereign yields on long-term bonds and raised the share prices of banks that held more sovereign bonds in their portfolios. This evidence is consistent with versions of the portfolio rebalancing channel acting through the removal of duration risk and the relaxation of leverage constraints for financial intermediaries. It then presents a stylised macroeconomic model that incorporates the aforementioned transmission channels. The model suggests that the macroeconomic impact of the programme can be expected to be sizable.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2839812_code485639.pdf?abstractid=2839812&mirid=5

The ECB's Asset Purchase Programme: An Early Assessment

https://www.nber.org/system/files/working_papers/w24230/w24230.pdf

Risks in China’s Financial System

We explore the effectiveness and balance of benefits and costs of so-called "unconventional" monetary policy measures extensively implemented in the wake of the financial crisis: balance sheet policies (commonly termed "quantitative easing"), forward guidance and negative policy rates. Our objective is to provide the reader with a helpful entry point to the burgeoning empirical literature and with a specific perspective on the complex issues involved. We reach three main conclusions: there is ample evidence that, to varying degrees, these measures have succeeded in influencing financial conditions even though their ultimate impact on output and inflation is harder to pin down; the balance of the benefits and costs is likely to deteriorate over time; and the measures are generally best regarded as exceptional, for use in very specific circumstances. Whether this will turn out to be the case, however, is doubtful at best and depends on more fundamental features of monetary policy frameworks. In the paper, we also provide a critique of prevailing analyses of "helicopter money" and explore in more depth the role of negative nominal interest rates in our fundamentally monetary economies, highlighting some risks.

Unconventional monetary policies: a re-appraisal

With policy rates near the zero bound, the Bank of Japan (BoJ) has introduced a series of unconventional monetary easing measures since late 2009 in response to lingering deflation and a weakening economy. These measures culminated in a new Asset Purchase Program under the Comprehensive Monetary Easing (CME) which differs from typical quantitative easing in other central banks by including purchases of risky asset in an effort to reduce term and risk premia. This note assesses the impact of monetary easing measures on financial markets using an event study approach. It finds that the BoJ’s monetary easing measures has had a statistically significant impact on lowering bond yields and improving equity prices, but no notable impact on inflation expectations.

Bank of Japan’s Monetary Easing Measures: Are They Powerful and Comprehensive?

Corporate credit growth in China has been excessive in recent years. This credit boom is related to the large increase in investment after the Global Financial Crisis. Investment efficiency has fallen and the financial performance of corporates has deteriorated steadily, affecting asset quality in financial institutions. The corporate debt problem should be addressed urgently with a comprehensive strategy. Key elements should include identifying companies in financial difficulties, proactively recognizing losses in the financial system, burden sharing, corporate restructuring and governance reform, hardening budget constraints, and facilitating market entry. A proactive strategy would trade off short-term economic pain for larger longer-term gain.

https://papers.ssrn.com/sol3/Delivery.cfm/wp16203.pdf?abstractid=2882640&mirid=1

Resolving China's Corporate Debt Problem

: Adoption of fiscal rules and fiscal councils continued to increase globally over the last decades based on two new global datasets. During the pandemic, fiscal frameworks were put to test. The widespread use of escape clauses was one of the novelties in this crisis, which helped provide policy room to respond to the health crisis. But the unprecedented fiscal actions have led to large and widespread deviations from deficit and debt limits. The evidence shows that fiscal rules, in general, have been flexible during crises but have not prevented a large and persistent buildup of debt over time. Experience shows that deviations from debt limits have been very difficult to reverse. The paper also presents evidence on the benefits of a good track record in abiding by the rules. All these highlights the difficult policy choices ahead and need to further improve rules-based fiscal frameworks. This presents an overview of fiscal rules and fiscal councils across the in the run-up to and during the COVID-19 pandemic. It relies on newly updated global datasets on fiscal rules and fiscal councils 1985–2021. 1 The evidence illustrates the sheds how on fiscal policy through numerical limits on budgetary boundaries are set for fiscal policy which cannot be frequently and some operational guidance is provided by specifying a numerical target that limits a particular budgetary aggregate. demarcation lines of what constitutes a fiscal rule are not always clear. For this dataset and

Fiscal Rules and Fiscal Councils: Recent Trends and Performance during the COVID-19 Pandemic

During risk-off episodes, the yen is a safe haven currency and on average appreciates against the U.S. dollar. We investigate the proximate causes of yen risk-off appreciations. We find that neither capital inflows nor expectations of the future monetary policy stancecan explain the yen’s safe haven behavior. In contrast, we find evidence that changes in market participants’ risk perceptions trigger derivatives trading, which in turn lead to changes in the spot exchange rate without capital flows. Specifically, we find that risk-offepisodes coincide with forward hedging and reduced net short positions or a buildup of net long positions in yen. These empirical findings suggest that offshore and complex financial transactions should be part of spillover analyses and that the effectiveness of capital flow management measures or monetary policy coordination to address excessive exchange rate volatility might be limited in certain cases.

https://papers.ssrn.com/sol3/Delivery.cfm/wp13228.pdf?abstractid=2365865&mirid=1

The Curious Case of the Yen as a Safe Haven Currency: A Forensic Analysis

Nonviable “zombie” firms have become a key concern in China. Using novel firm-level industrial survey data, this paper illustrates the central role of zombies and their strong linkages with stateowned enterprises (SOEs) in contributing to debt vulnerabilities and low productivity. As a group, zombie firms and SOEs account for an outsized share of corporate debt, contribute to much of the rise in debt, and face weak fundamentals. Empirical results also show that resolving these weak firms can generate significant gains of 0.7–1.2 percentage points in long-term growth per year. These results also shed light on the ongoing government strategy to tackle these issues by evaluating the effects of different restructuring options. In particular, deleveraging, reducing government subsidies, as well as operational restructuring through divestment and reducing redundancy have significant benefits in restoring corporate performance for zombie firms.

/pdf/resolving-china-s-zombies-tackling-debt-and-raising-16g4348nn0.pdf

W. Raphael Lam

Papers

Bank of Japan’s Monetary Easing Measures: Are They Powerful and Comprehensive?

Resolving China's Corporate Debt Problem

Fiscal Rules and Fiscal Councils: Recent Trends and Performance during the COVID-19 Pandemic

The Curious Case of the Yen as a Safe Haven Currency: A Forensic Analysis

Resolving China's Zombies: Tackling Debt and Raising Productivity