The economic environment for monetary policy has been in a state of flux for an extended period of time. Years of low inflation and low policy interest rates were followed by the recent episode of high inflation and vulnerable growth. Both policy makers and researchers may need to revisit their...

The global economic order is undergoing a fundamental transformation, characterized by growing competition between China, Europe, and the United States, and a shift from a rules-based to a more power-based system. Geopolitical considerations now increasingly dictate policy decisions and the...

This conference brings together recent research on the economics of Artificial Intelligence. It is is jointly organized by the Hertie School, IZA, the Kiel Institute, and Sciences Po, in collaboration with the CEPR.

Upon assuming control of Baoshang Bank, Chinese bank regulators announced that they would eschew bailing out large creditors of this city-level distressed bank in full. This paper investigates the consequences of this unexpected deviation from the long-standing full bailout policy. Employing a...

A workhorse two-country portfolio model that embeds net foreign asset (NFA) imbalances rationalizes the following observation: debtor countries have on average a less diversified international portfolio than creditor countries. Abstracting from NFA imbalances, the model would feature a...

We estimate empirically the impact of the insolvency and bankruptcy code (IBC) on corporate leverage in India. The analysis builds on the Prowess database. For the estimations we use the difference in differences approach, where listed firms are used as the control group. We find that the IBC...

We examine the effect of regional favoritism on firms’ access to credit. Using firm-level data on a large sample of 29,000 firms covering 48 countries, we investigate the hypothesis that access to credit of firms is higher in the birth regions of national political leaders. We find evidence...

We evaluate the impact of loan-to-value restrictions on household financial vulnerability. Using Norwegian tax data, we first document a beneficial leverage effect, in which households respond to the regulation by reducing house purchase probabilities, debt and interest expenses. Second, we...

We introduce shocks to the availability of US dollar funding for non-US financial intermediaries in a two-country New Keynesian model with financial frictions. Such dollar shortages lead to uncovered interest rate parity deviations and have a significant negative effects on the macroeconomy....

This paper investigates how monetary expansion affects household consumption and savings through household debts. Using monetary policy cuts in China in the end of 2008 as an experiment, we find that the resulted increase in indebted households’ disposable income leads to increasing...