Macroeconomic modelling of CBDC: a critical review

08/29/2024 European Central Bank Central banks

Over the last decades, macro-economists have renewed their efforts to reduce the gap between monetary macroeconomics and real-world central banking. This paper reviews how macroeconomics has since 2016 approached the possible introduction of retail central bank digital currencies (CBDC). A review of the literature reveals that macroeconomic models of CBDC often rely on CBDC design features and narratives which are no longer in line with the one of central banks actually working on CBDC.

Aim, focus, shoot. The choice of appropriate and effective macroprudential instruments

08/29/2024 European Central Bank Central banks

We examine the issue of the appropriate selection of macroprudential instruments according to the vulnerabilities identified and the policymakers’ objectives using a version of the 3D DSGE model following Mendicino et al. (2020) and Hinterschweiger et al. (2021) calibrated for the euro area. We consider a broad set of macroprudential instruments, including broad and sectoral countercyclical capital requirements, LTV and LTI limits and assess their transmission channels as well as their effectiveness in mitigating rising broad and sectoral vulnerabilities.

FEDS Paper: Out of Sight, Out of Mind: Nearby Branch Closures and Small Business Growth

08/28/2024 Federal Reserve Central banks

Ben Ranish, Andrea Stella, and Jeffery ZhangSince 2010, the total number of commercial bank branches in the United States has fallen by about 20%. Do branch closures meaningfully affect economic activity? We investigate the impact of branch closures on small businesses, whose credit access may be facilitated through local relationships with bankers.

The aggregate and distributional implications of credit shocks on housing and rental markets

08/28/2024 European Central Bank Central banks

We build a model of the aggregate housing and rental markets in which houseprices and rents are determined endogenously. Households can choose their housingtenure status (renters, homeowners, or landlords) and the size of their homes dependingon their age, income and wealth. We use our model to study the impact of changesin credit conditions on house prices, rents and household welfare.

The “Fortune 500” of 1812

08/27/2024 Ineteconomics Analysis

By 1812 the U.S. already had more business corporations than any other country and possibly more than all other countries combined.
Fortune magazine began publishing annual rankings of U.S. corporations by revenue in 1955. Ever since, scholars and forecasters have analyzed changes in the Fortune 500 to help inform their judgments about industry concentration and the relative importance of different sectors of the economy.

The life-cycle dynamics of wealth mobility

08/27/2024 European Central Bank Central banks

We use 25 years of tax records for the Norwegian population to study the mobility of wealth over people’s lifetimes. We find considerable wealth mobility over the life cycle. To understand the underlying mobility patterns, we group individuals with similar wealth rank histories using agglomerative hierarchical clustering, a tool from statistical learning. The mobility patterns we elicit provide evidence of segmented mobility. Over 60 percent of the population remains at the top or bottom of the wealth distribution throughout their lives.

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