Financial Conditions and Macroeconomic Performance
Financial Conditions and Macroeconomic Performance

Author: Steven M. Fazzari

Publisher: Routledge

Published: 2015-06-05

Total Pages: 209

ISBN-13: 1317470575

DOWNLOAD EBOOK

This collection of papers on financial instability and its impact on macroeconomic performance honours Hyman P. Minsky and his lifelong work. It is based on a conference at Washington University, St. Louis, in 1990 and includes among the authors Benjamin M. Friedman, Charles P. Kindleberger, Jan Kregel and Steven Fazzari. These papers consider Minsky's definitive analysis that yields such a clear and disturbing sequence of financial events: booms, government intervention to prevent debt contraction and new booms that cause a progressive buildup of new debt, eventually leaving the economy much more fragile financially.

International Macroeconomics in the Wake of the Global Financial Crisis
International Macroeconomics in the Wake of the Global Financial Crisis

Author: Laurent Ferrara

Publisher: Springer

Published: 2018-06-13

Total Pages: 300

ISBN-13: 3319790757

DOWNLOAD EBOOK

This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.

Incorporating Macro-Financial Linkages into Forecasts Using Financial Conditions Indices: The Case of France
Incorporating Macro-Financial Linkages into Forecasts Using Financial Conditions Indices: The Case of France

Author: Ms.Piyabha Kongsamut

Publisher: International Monetary Fund

Published: 2017-12-01

Total Pages: 36

ISBN-13: 148433096X

DOWNLOAD EBOOK

How can information on financial conditions be used to better understand macroeconomic developments and improve macroeconomic projections? We investigate this question for France by constructing country-specific financial conditions indices (FCIs) that are tailored to movements in GDP, investment, private consumption and exports respectively. We rely on a VAR approach to estimate the weights of the financial components of each FCI, including equity market returns (which turn out having a relatively strong weight across all FCIs), private sector risk premiums, long-term interest rates, and banks’ credit standards. We find that the tailored FCIs are useful as leading indicators of GDP, investment, and exports, and as a contemporaneous indicator of private consumption. Credit volumes turn out to be lagging indicators of growth. The indices inform us on macro-financial linkages in France and are used to improve the accuracy of quarterly forecasting models and high-frequency “nowcast” models. We show that FCI-augmented models could have significantly improved forecasts during and after the global financial crisis.

Financial Markets and Economic Performance
Financial Markets and Economic Performance

Author: John E. Silvia

Publisher: Springer Nature

Published: 2021-07-31

Total Pages: 469

ISBN-13: 3030762955

DOWNLOAD EBOOK

Effective decision making requires understanding of the underlying principles of financial markets and economics. Intellectually, economics and financial markets are genetically intertwined although when it comes to popular commentary they are treated separately. In fact, academic economic thinking appears separate from financial market equity strategy in most financial market commentary. Historically, macroeconomics tended to assume away financial frictions and financial intermediation whereas financial economists did not necessarily consider the negative macroeconomic spill overs from financial market outcomes. In more recent years, the economic discipline has gone through a serious self-reflection after the global crisis. This book explores the interplay between financial markets and macroeconomic outcomes with a conceptual framework that combines the actions of investors and individuals. Of interest to graduate students and those professionals working in the financial markets, it provides insight into why market prices move and credit markets interact and what factors participants and policy makers can monitor to anticipate market change and future price paths. ​

Non-Performing Loans in CESEE
Non-Performing Loans in CESEE

Author: Nir Klein

Publisher: International Monetary Fund

Published: 2013-03-20

Total Pages: 27

ISBN-13: 1484318528

DOWNLOAD EBOOK

The paper investigates the non-performing loans (NPLs) in Central, Eastern and South-Eastern Europe (CESEE) in the period of 1998–2011. The paper finds that the level of NPLs can be attributed to both macroeconomic conditions and banks’ specific factors, though the latter set of factors was found to have a relatively low explanatory power. The examination of the feedback effects broadly confirms the strong macro-financial linkages in the region. While NPLs were found to respond to macroeconomic conditions, such as GDP growth, unemployment, and inflation, the analysis also indicates that there are strong feedback effects from the banking system to the real economy, thus suggesting that the high NPLs that many CESEE countries currently face adversely affect the pace economic recovery.

Financial Conditions, Macroeconomic Uncertainty, and Macroeconomic Tail Risks
Financial Conditions, Macroeconomic Uncertainty, and Macroeconomic Tail Risks

Author: Yu-Fan Huang

Publisher:

Published: 2022

Total Pages: 0

ISBN-13:

DOWNLOAD EBOOK

This paper investigates how financial conditions and macroeconomic uncertainty jointly affect macroeconomic tail risks. We first document that tight financial conditions decrease all conditional quantiles of future output growth in the near term, while high macroeconomic uncertainty stretches the interquartile range, leaving the median intact. Because financial conditions and uncertainty comove substantially, the conditional means and variances shift simultaneously in the opposite direction. Consequently, the downside risk varies much more than the upside risk. Using a structural VAR, we find that both financial and uncertainty shocks tighten financial conditions and heighten macroeconomic uncertainty instantaneously. Therefore, all conditional quantiles of output growth decrease disproportionately in response to both shocks, and the conditional distribution of output growth not only shifts but also skews to the left, leading to greater growth vulnerability for 2 to 3 years in the future.

Effects of Monetary and Macroprudential Policies on Financial Conditions
Effects of Monetary and Macroprudential Policies on Financial Conditions

Author: Ms.Aleksandra Zdzienicka

Publisher: International Monetary Fund

Published: 2015-12-31

Total Pages: 29

ISBN-13: 1513534998

DOWNLOAD EBOOK

The Global Financial Crisis has reopened discussions on the role of the monetary policy in preserving financial stability. Determining whether monetary policy affects financial variables domestically—especially compared to the effects of macroprudential policies— and across borders, is crucial in this context. This paper looks into these issues using U.S. exogenous monetary policy shocks and macroprudential policy measures. Estimates indicate that monetary policy shocks have significant and persistent effects on financial conditions and can attenuate long-term financial instability. In contrast, the impact of macroprudential policy measures is generally more immediate but shorter-lasting. Also, while an exogenous increase in U.S. monetary policy rates tends to reduce credit and house prices in other countries—with the effects varying with country-specific characteristics—an increase driven by improved U.S. economic conditions tends to have the opposite effect. Finally, we do not find evidence of cross-border spillover effects associated with U.S. macroprudential policies.

Financial Globalization and Monetary Policy
Financial Globalization and Monetary Policy

Author: Steven B. Kamin

Publisher: DIANE Publishing

Published: 2011-05

Total Pages: 58

ISBN-13: 1437939066

DOWNLOAD EBOOK

Reviews the available evidence and previous research on potential effects of financial globalization, that is, the international integration of financial markets. Central banks with floating currencies retain the ability to independently determine short-term interest rates and thus influence broader financial conditions and macro-economic performance in their economies. However, domestic financial conditions appear to have become more vulnerable to a wide range of external shocks, complicating the task of making appropriate monetary policy decisions. Moreover, the financial crisis has highlighted the importance of cross-border channels for the transmission of liquidity and credit shocks. Charts and tables. This is a print on demand report.

Macrofinancial Causes of Optimism in Growth Forecasts
Macrofinancial Causes of Optimism in Growth Forecasts

Author: Mr. Yan Carriere-Swallow

Publisher: International Monetary Fund

Published: 2021-11-12

Total Pages: 22

ISBN-13: 1616356391

DOWNLOAD EBOOK

We analyze the causes of the apparent bias towards optimism in growth forecasts underpinning the design of IMF-supported programs, which has been documented in the literature. We find that financial variables observable to forecasters are strong predictors of growth forecast errors. The greater the expansion of the credit-to-GDP gap in the years preceding a program, the greater its over-optimism about growth over the next two years. This result is strongest among forecasts that were most optimistic, where errors are also increasing in the economy’s degree of liability dollarization. We find that the inefficient use of financial information applies to growth forecasts more broadly, including the IMF’s forecasts in the World Economic Outlook and those produced by professional forecasters compiled by Consensus Economics. We conclude that improved macrofinancial analysis represents a promising avenue for reducing over-optimism in growth forecasts.

A Financial Conditions Index for South Africa
A Financial Conditions Index for South Africa

Author: Mr.Nombulelo Gumata

Publisher: International Monetary Fund

Published: 2012-08-01

Total Pages: 20

ISBN-13: 1475505450

DOWNLOAD EBOOK

The main purpose of this paper is to construct a financial conditions index (FCI) for South Africa. The analysis extracts the index by applying two alternative approaches (principal component analysis and Kalman filter), which identify an unobservable common factor from a group of external and domestic financial indicators. The alternative estimated FCIs, which share a similar trajectory over time, seem to have a powerful predictive information for the near-term GDP growth (up to four quarters), and they outperform the South African Reserve Bank’s (SARB) leading indicator as well as individual financial variables. Their recent dynamics suggest that following a strong recovery in late-2009 and 2010, reflecting in part domestic factors such as systematic reductions in the policy rate, the rebound in real economic activity, and a benign inflationary environment, the financial conditions have deteriorated in recent months, though not as sharply as in end-2008. Given their relatively high predictive power regarding GDP growth, a further deterioration may imply that economic activity is likely to slow in the period ahead.