Eoin Treacy's view

OECD: “Annual Survey of Large Pension Funds”
 

Fed: What’s Keeping Millennials at Home: Debt, Jobs, or Housing?

groups who were more heavily reliant on student debt while in school are significantly and substantially more likely to move home to parents when living independently, and are significantly and substantially less likely to move away from parents when living at home.

BIS: “Secular stagnation, debt overhang and other rationales for sluggish growth, six years on”

There is considerable controversy over why sluggish economic growth persists across many advanced economies six years after the onset of the financial crisis. Theories include a secular deficiency in aggregate demand, slowing innovation, adverse demographics, lingering policy uncertainty, post-crisis political fractionalisation, debt overhang, insufficient fiscal stimulus, excessive financial regulation, and some mix of all of the above. This paper surveys the alternative viewpoints. We argue that until significant pockets of private, external and public debt overhang further abate, the potential role of other headwinds to economic growth will be difficult to quantify.

“The Effect of Population Aging on Economic Growth”

We estimate that a 10% increase in the fraction of the population ages 60+ decreases GDP per capita by 5.7%. We find that this reduction in economic growth caused by population aging is primarily due to a decrease in growth in the supply of labor. To a lesser extent, it is also due to a reduction in productivity growth.

Fed: “The Demand for Short-Term, Safe Assets and Financial Stability”

A number of researchers have recently argued that the growth of the shadow banking system in the years preceding the recent U.S. financial crisis was driven by rising demand for “money-like” claims—short-term, safe instruments (STSI)—from institutional investors and nonfinancial firms. These instruments carry a money premium that lowers their yields. While government securities are an important part of the supply of STSI, financial intermediaries also take advantage of this money premium when they issue certain types of low-risk, short-term debt, such as asset-backed commercial paper or repo. In this paper, we take the demand for STSI as given and consider the extent to which central banks can improve financial stability and manage maturity transformation by the private sector through their ability to affect the public supply of STSI. The first part of the paper provides new evidence that complements the existing literature on two key ingredients that are necessary for there to be a role for policy: the extent to which public short-term debt and private short-term debt might be substitutes, and the relationship between the money premium and the supply of STSI. The second part of the paper then builds on this evidence and discusses potential ways a central bank could use its balance sheet and monetary policy implementation framework to affect the quantity and mix of short-term liquid assets that will be available to financial market participants.

“The structural behavior of China-US trade flows”

We examine Chinese-US trade flows over the 1994-2012 period, and find that, in line with the conventional wisdom, the value of China’s exports to the US responds negatively to real Renminbi (RMB) appreciation, while import responds positively.

Fed: “When Does a Central Bank’s Balance Sheet Require Fiscal Support?”

we argue that it would be appropriate for a central bank with a large balance sheet composed of long-duration nominal assets to have access to, and be willing to ask for, support for its balance sheet by the fiscal authority. Otherwise its ability to control inflation may be at risk. This need for balance sheet support—a within-government transaction—is distinct from the need for fiscal backing of inflation policy that arises even in models where the central bank’s balance sheet is merged with that of the rest of the government.

“Conventional and Unconventional Votes: A Tale of Three Monetary Policy Committees”

we show that relative to conventional policy regimes, committee members voting in unconventional regimes who are (i) directly appointed by the government, and (ii) appointed in periods during which left-wing governments are in power, are more likely to dissent on the side of monetary ease. Put another way, the decision to dissent is partially governed by whether the monetary policy regime is a conventional or an unconventional one. 

CBO: “How Changes in Immigration Policy Might Affect the Federal Budget”