E3 - Prices, Business Fluctuations, and Cycles

• Labor Mobility in a Monetary Union

  Staff Working Paper 2019-15 Daniela Hauser, Martin Seneca

  The optimal currency literature has stressed the importance of labor mobility as a precondition for the success of monetary unions. But only a few studies formally link labor mobility to macroeconomic adjustment and policy. In this paper, we study macroeconomic dynamics and optimal monetary policy in an economy with cyclical labor flows across two distinct regions that share trade links and a common monetary framework.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Labour markets, Monetary policy framework, Regional economic developments JEL Code(s): E, E3, E32, E5, E52, F, F4

• Inflation Targeting and Liquidity Traps Under Endogenous Credibility

  Staff Working Paper 2019-9 Cars Hommes, Joep Lustenhouwer

  Policy implications are derived for an inflation-targeting central bank, whose credibility is endogenous and depends on its past ability to achieve its targets. This is done in a New Keynesian framework with heterogeneous and boundedly rational expectations.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credibility, Monetary policy JEL Code(s): C, C6, C62, E, E3, E32, E5, E52

• Macroprudential Policy with Capital Buffers

  Staff Working Paper 2019-8 Josef Schroth

  The countercyclical capital buffer is part of Basel III, the set of regulatory measures developed in response to the financial crisis of 2007–09. This study focuses on how time-varying capital buffers can address inefficiencies in economies with endogenous financial crises.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Credit risk management, Financial stability, Financial system regulation and policies, Lender of last resort JEL Code(s): E, E1, E13, E3, E32, E4, E44

• Drivers of Weak Wage Growth in Advanced Economies

  Staff Analytical Note 2019-3 Anne-Katherine Cormier, Michael Francis, Kristina Hess, Guillaume Poulin-Bellisle

  Since the global financial crisis, advanced-economy wage growth has been generally low relative to past recoveries, especially after accounting for the evolution of labour market conditions over this period. This paper investigates a variety of potential explanations for this weakness, drawing on findings from the literature as well as analysis of recent labour market data in advanced economies.

  Content Type(s): Staff research, Staff analytical notes Topic(s): International topics, Labour markets JEL Code(s): E, E3, E31, F, F0, J, J3

• Corporate Debt Composition and Business Cycles

  Staff Working Paper 2019-5 Jelena Zivanovic

  Based on empirical evidence, I propose a dynamic stochastic general equilibrium model with two financial sectors to analyze the role of corporate debt composition (bank versus bond financing) in the transmission of economic shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Financial institutions, Financial markets, Recent economic and financial developments JEL Code(s): E, E3, E32, E4, E44