Research

• Uncertain Fiscal Consolidations

  Staff Working Paper 2013-26 Huixin Bi, Eric M. Leeper, Campbell Leith

  The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Fiscal policy, Monetary policy and uncertainty JEL Code(s): E, E6, E62, E63, H, H3, H30, H6, H60

• Are Product Spreads Useful for Forecasting? An Empirical Evaluation of the Verleger Hypothesis

  Staff Working Paper 2013-25 Christiane Baumeister, Lutz Kilian, Xiaoqing Zhou

  Notwithstanding a resurgence in research on out-of-sample forecasts of the price of oil in recent years, there is one important approach to forecasting the real price of oil which has not been studied systematically to date.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, International topics JEL Code(s): C, C5, C53, G, G1, G15, Q, Q4, Q43

• Is There a Quality Bias in the Canadian CPI? Evidence from Micro Data

  Staff Working Paper 2013-24 Oleksiy Kryvtsov

  Rising consumer prices may reflect shifts by consumers to new higher-priced products, mostly for durable and semi-durable goods. I apply Bils’ (2009) methodology to newly available Canadian consumer price data for non-shelter goods and services to estimate how price increases can be divided between quality growth and price inflation.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Potential output JEL Code(s): E, E3, E31, M, M1, M11, O, O4, O47

• A Blessing in Disguise: The Implications of High Global Oil Prices for the North American Market

  Staff Working Paper 2013-23 Ron Alquist, Justin-Damien Guénette

  We examine the implications of increased unconventional crude oil production in North America. This production increase has been made possible by the existence of alternative oil-recovery technologies and persistently elevated oil prices that make these technologies commercially viable.

  Content Type(s): Staff research, Staff working papers Topic(s): International topics, Recent economic and financial developments JEL Code(s): Q, Q4, Q41, Q43, Q47

• The Threat of Counterfeiting in Competitive Search Equilibrium

  Staff Working Paper 2013-22 Enchuan Shao

  Recent studies in monetary theory show that if buyers can use lotteries to signal the quality of bank notes, counterfeiting does not occur in a pooling equilibrium. In this paper, I investigate the robustness of this non-existence result by considering an alternative trading mechanism.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes JEL Code(s): D, D8, D82, D83, E, E4, E42

• Why Do Emerging Markets Liberalize Capital Outflow Controls? Fiscal versus Net Capital Flow Concerns

  Staff Working Paper 2013-21 Joshua Aizenman, Gurnain Pasricha

  In this paper, we provide empirical evidence on the factors that motivated emerging economies to change their capital outflow controls in recent decades. Liberalization of capital outflow controls can allow emerging-market economies (EMEs) to reduce net capital inflow (NKI) pressures, but may cost their governments the fiscal revenues that external financial repression generates.

  Content Type(s): Staff research, Staff working papers Topic(s): Debt management, Financial system regulation and policies, International topics, Recent economic and financial developments JEL Code(s): F, F3, F32, G, G1, G15

• Money Market Rates and Retail Interest Regulation in China: The Disconnect between Interbank and Retail Credit Conditions

  Staff Working Paper 2013-20 Nathan Porter, TengTeng Xu

  Interest rates in China are composed of a mix of both market-determined interest rates (interbank rates and bond yields), and regulated interest rates (retail lending and deposit rates), reflecting China’s gradual process of interest rate liberalization.

  Content Type(s): Staff research, Staff working papers Topic(s): Development economics, Econometric and statistical methods, Financial markets, Monetary policy framework, Monetary policy transmission JEL Code(s): C, C2, C22, E, E4, E43, E5, E52, E58

• Business Cycle Effects of Credit Shocks in a DSGE Model with Firm Defaults

  Staff Working Paper 2013-19 M. Hashem Pesaran, TengTeng Xu

  This paper proposes a theoretical framework to analyze the relationship between credit shocks, firm defaults and volatility, and to study the impact of credit shocks on business cycle dynamics.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Economic models, Financial institutions JEL Code(s): E, E3, E32, E4, E44, G, G2, G21

• Booms and Busts in House Prices Explained by Constraints in Housing Supply

  Staff Working Paper 2013-18 Narayan Bulusu, Jefferson Duarte, Carles Vergara-Alert

  We study the importance of supply constraints in explaining the heterogeneity in house price cycles across geographies in the United States.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Economic models JEL Code(s): R, R3, R31

• Fire-Sale FDI or Business as Usual?

  Staff Working Paper 2013-17 Ron Alquist, Rahul Mukherjee, Linda Tesar

  Using a new data set, we examine the characteristics and dynamics of cross-border mergers and acquisitions during emerging-market financial crises, that is, so-called “fire-sale FDI.” Our findings shed fresh light on whether the transactions undertaken during crisis periods differ in fundamental ways from those undertaken during more tranquil periods.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, International financial markets, International topics JEL Code(s): F, F2, F21, G, G0, G01, G3, G34