Central banks

Macroeconomic regime change and the size of supply chain disruption and energy supply shocks

09/24/2025 European Central Bank Central banks

The COVID-19 pandemic and Russia’s invasion of Ukraine have complicated macroeconomic forecasting and policymaking due to unprecedented disruptions in supply chains and energy markets, suggesting a new macroeconomic regime. However, we are unable to reject the null hypothesis of no structural break in March 2020. We then examine whether these shocks have increased post-COVID-19. Their sizes were initially elevated, but then have been gradually returning to pre-pandemic levels.

The ECB-Multi Country Model. A semi-structural model for forecasting and policy analysis for the largest euro area countries

09/23/2025 European Central Bank Central banks

This paper introduces the European Central Bank’s Multi Country model (ECB-MC), a coherent macroeconomic framework designed to support economic forecasting and policy analysis within the Eurosystem. The ECB-MC captures the economic dynamics of the five major economies in the euro area – Germany, France, Italy, Spain, and the Netherlands – which account for more than 80 percent of the euro area total GDP.

IFDP Paper: Core Inflation in the Advanced Economies: A Regional Perspective

09/19/2025 Federal Reserve Central banks

Daniel O. Beltran and Julio L. OrtizWe explore differences in the dynamics of core inflation between Europe and North America using a Bayesian time series filter that decomposes the level of core inflation in the major advanced economies into regional, global, and country-specific components. We find a prominent role for both regional and global factors. Historically, the two regional components have at times diverged.

FEDS Paper: Where's The Bank? Banking Access in the Era of Branch Consolidation

09/19/2025 Federal Reserve Central banks

Robert M. Adams and Shane M. SherlundThis study examines changes in household and employment access to bank branches in the United States from 2014 to 2024, calculating distances with highly granular census block-level data. We develop a continuous measure of bank branch access that accounts for population and employment density, implicitly accounting for varying travel times within different urban and rural areas.

FEDS Paper: Non-homothetic Demand Shifts and Inflation Inequality

09/19/2025 Federal Reserve Central banks

Jacob OrchardThis paper shows that adverse macroeconomic shocks systematically increase inflation for low-income households relative to high-income households. I document two key facts: (i) during every U.S. recession since 1959, aggregate spending shifts toward products disproportionately purchased by low-income households (necessities); and (ii) relative prices of necessities rise during recessions.

FEDS Paper: Monetary Policy and Bank Funding Costs: Patterns and Predictability in the Transmission of the Policy Rate to U.S. Banks' Funding Costs

09/19/2025 Federal Reserve Central banks

Daniel A. Dias; Sophia C. ScottThis paper shows that U.S. commercial banks' funding betas rise predictably with the length, magnitude, and direction of each monetary policy cycle: longer cycles and those with larger changes in the policy rate yield stronger pass-through in both tightening and loosening cycles, with modest asymmetry favoring slightly greater transmission during loosening cycles. Nondeposit liabilities consistently adjust more than deposits.

FEDS Paper: Do Banks Price Flood Risk in Mortgage Origination: Evidence from a Natural Experiment in New Orleans

09/19/2025 Federal Reserve Central banks

David M. Arseneau and Gazi I. KaraThis paper uses a large-scale redrawing of flood zone maps for the City of New Orleans in 2016 to identify how banks respond to changes in perceived flood risk in residential mortgage origination. Using geo-coding, we separate loan-level data on mortgage originations into treatment versus control groups based on how individual properties were affected by the map changes.

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