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Begin New Search Content Type Commentary and Analysis Publication Year within 10 Years

1991. How can we strengthen local government responses to displacement in Africa?

Author:
Caroline Smith and Luke Fuller
Publication Date:
06-2015
Content Type:
Commentary and Analysis
Institution:
Urban Institute
Abstract:
Of the world’s 10.5 million refugees, just one-third reside in camps. This figure turns on its head the common perception that refugees live in rural camp settings and begs the question: where are the other seven million refugees? The short answer is that many refugees and displaced peoples make their way to cities or other communities in pursuit of better opportunities for employment and education, to join existing ethnic or familial social networks, and to gain some level of security not available to them in settlements. However, host country policies designed to protect and support refugees often apply only to those residing in settlements, implicitly discouraging refugees from moving into urban areas. So if policies largely overlook the existence of urban refugees, how do governments, humanitarian agencies, civil society organizations, and others plan, implement, and coordinate efforts to ensure that this massive segment of the refugee population is cared for?
Topic:
Government, Refugees, and Displacement
Political Geography:
Africa

1992. What defines a “city”?

Author:
Ammar A. Malik and Julia Hagen
Publication Date:
10-2015
Content Type:
Commentary and Analysis
Institution:
Urban Institute
Abstract:
Readers love lists, especially city rankings. There are lists that rank the world’s leading cities of opportunity, the most sustainable cities, the bike-friendliest cities, the top shopping cities, and even the most competitive cities in the future. What they all share is an attempt to measure cities. But what defines a city? The answer isn’t as clear-cut as it seems. Every year, leading corporations fund the publication of an increasingly large number of benchmarking studies, which generate significant interest in the media. Even the UN has jumped on this bandwagon by adapting, for the first time, an urban goal within the Sustainable Development Goals framework. However, the basic question of what constitutes a city is often defined inconsistently across rankings. This could leave general-interest readers and policymakers, confused, or worse—misled.
Topic:
United Nations, Urbanization, Sustainable Development Goals, and Cities
Political Geography:
Global Focus

1993. Monetary Policy, Trend Inflation and the Great Moderation: An Alternative Interpretation - Comment

Author:
Jonas E. Arias, Guido Ascari, Nicola Branzoli, and Efrem Castelnuovo
Publication Date:
01-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Working with a small-scale calibrated New-Keynesian model, Coibion and Gorodnichenko (2011) find that the reduction in trend inflation during Volcker's mandate was a key factor behind the Great Moderation. We revisit this finding with an estimated New-Keynesian model with trend inflation and no indexation based on Christiano, Eichenbaum and Evans (2005). First, our simulations confirm Coibion and Gorodnichenko's (2011) main finding. Second, we show that a trend inflation-immune Taylor rule based on economic theory can avoid indeterminacy even at high levels of trend inflation such as those observed in the 1970s.
Topic:
Economics, Monetary Policy, Economic Theory, and Inflation
Political Geography:
Global Focus

1994. Government Connections and Financial Constraints: Evidence from a Large Representative Sample of Chinese Firms

Author:
Robert Cull, Bo Sun, and Lixin Colin Xu
Publication Date:
01-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We examine the role of firms’ government connections, defined by government intervention in CEO appointment and the status of state ownership, in determining the severity of financial constraints faced by Chinese firms. We demonstrate that government connections are associated with substantially less severe financial constraints (i.e., less reliance on internal cash flows to fund investment), and that the sensitivity of investment to internal cash flows is higher for firms that report greater obstacles to obtaining external funds. We also find that those large non-state firms with weak government connections, likely the engine for innovation in the coming years in China, are especially financially constrained, due perhaps to the formidable hold that their state rivals have on financial resources after the ‘grabbing-the-big-and-letting-go-the-small’ privatization program in China. Our empirical results suggest that government connections play an important role in explaining Chinese firms’ financing conditions, and provide further evidence on the nature of the misallocation of credit by China’s dominant state-owned banks.
Topic:
Privatization, Governance, Business, Fiscal Policy, Innovation, and Banking
Political Geography:
China and Asia

1995. Risk Choices and Compensation Design

Author:
Mark Carey and Bo Sun
Publication Date:
01-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We analyze the impact of bad-tail risks on managerial pay functions, especially the decision to pay managers in stock or in options. In contrast to conventional wisdom, we find that options are often a superior vehicle for limiting managerial incentives to take bad-tail risks while providing incentives to exert effort. Arrangements similar to collar options are able to incent the desired project choice in wider range of circumstances than call options or stock. However, information requirements appear high. We briefly explore alternatives with features similar to maluses and clawbacks, which are a bit like weakening the limited liability of managers.
Topic:
Labor Issues, Risk, Business Management, Stock Markets, and Wage Growth
Political Geography:
Global Focus

1996. Large Capital Inflows, Sectoral Allocation, and Economic Performance

Author:
Gianluca Benigno, Nathan Converse, and Luca Fornaro
Publication Date:
03-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper describes the stylized facts characterizing periods of exceptionally large capital inflows in a sample of 70 middle- and high-income countries over the last 35 years. We identify 155 episodes of large capital inflows and find that these events are typically accompanied by an economic boom and followed by a slump. Moreover, during episodes of large capital inflows capital and labor shift out of the manufacturing sector, especially if the inflows begin during a period of low international interest rates. However, accumulating reserves during the period in which capital inflows are unusually large appears to limit the extent of labor reallocation. Larger credit booms and capital inflows during the episodes we identify increase the probability of a sudden stop occurring during or immediately after the episode. In addition, the severity of the post-inflows recession is significantly related to the extent of labor reallocation during the boom, with a stronger shift of labor out of manufacturing during the inflows episode associated with a sharper contraction in the aftermath of the episode.
Topic:
Industrial Policy, Labor Issues, Capital Flows, Manufacturing, and Capital
Political Geography:
Global Focus

1997. Risk, Financial Development and Firm Dynamics

Author:
Bernardo Morias
Publication Date:
05-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
I document that the average productivity of firms tends to increase, and its variance to decrease, as they age. These two facts combined suggest that managers learn to reduce their mistakes as they operate. I develop a quantitative framework mimicking these dynamics and find that young firms have substantially higher financing costs due to lower and riskier returns. In this scenario, a reduction in the financial development of an economy raises disproportionately the cost of credit of young-productive firms increasing the input misallocation within this subgroup. To test the validity of the theory, I find that the data confirms some novel predictions on a series of firm-level moments. Finally, I show that introducing these two facts allows the model to better explain the relation between financial and economic development.
Topic:
Development, Economic Theory, Risk, Fiscal Policy, Models, and Productivity
Political Geography:
Global Focus

1998. International Financial Spillovers to Emerging Market Economies: How Important Are Economic Fundamentals?

Author:
Shaghil Ahmed, Brahima Coulibaly, and Andrei Zlate
Publication Date:
05-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We assess the importance of economic fundamentals in the transmission of international shocks to financial markets in various emerging market economies (EMEs). Our analysis covers the so-called taper-tantrum episode of 2013 and six earlier episodes of severe EME-wide financial stress since the mid-1990s. Cross-country regressions lead us to the following results: (1) EMEs with relatively better economic fundamentals suffered less deterioration in financial markets during the 2013 taper-tantrum episode. (2) Differentiation among EMEs set in quite early and persisted throughout this episode. (3) Controlling for economic fundamentals, we also find that, during the taper tantrum, financial conditions deteriorated more in those EMEs that had earlier experienced larger private capital inflows and greater exchange rate appreciation. (4) For earlier episodes, we find little evidence of investor differentiation across EMEs being explained by differences in their relative vulnerabilities during EME crises of the 1990s and early 2000s. (5) That said, differentiation across EMEs based on fundamentals does not appear to be unique to the 2013 episode. Differences in economic fundamentals played a role in explaining the heterogeneous EME financial market responses during the global financial crisis of 2008, and the role of fundamentals appeared to progressively increase through the European crisis in 2011 and subsequently the 2013 taper tantrum.
Topic:
Economics, Emerging Markets, Markets, Exchange Rate Policy, Fiscal Policy, and Economic Crisis
Political Geography:
Global Focus

1999. The Liquidity Effects of Official Bond Market Intervention

Author:
Michiel De Pooter, Robert F Martin, and Seth Pruitt
Publication Date:
07-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
To "ensure depth and liquidity," the European Central Bank in 2010 and 2011 repeatedly intervened in sovereign debt markets through its Securities Markets Programme. These purchases provide a unique natural experiment for testing the effects of large-scale asset purchases on risk premia arising from liquidity concerns. To explore how official intervention influences liquidity premia, we develop a search-based asset-pricing model. Consistent with our model's predictions, we find statistically and economically significant stock and flow effects on sovereign bonds' liquidity premia in response to official purchases.
Topic:
Markets, Bonds, Banking, and Liquidity
Political Geography:
Europe

2000. Realized Bank Risk during the Great Recession

Author:
Yener Altunbas, Simone Manganelli, and David Marques-Ibanez
Publication Date:
08-2015
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In the years preceding the 2007-2009 financial crisis, forward-looking indicators of bank risk concentrated and suggested unusually low expectations of bank default. We assess whether the ex-ante (i.e. prior to the crisis) cross-sectional variability in bank characteristics is related to the ex-post (i.e. during the crisis) materialization of bank risk. Our tailor-made dataset crucially accounts for the different dimensions of realized bank risk including access to central bank liquidity during the crisis. We consistently find that less reliance on deposit funding, more aggressive credit growth, larger size and leverage were associated with larger levels of realized risk. The impact of these characteristics is particularly relevant for capturing the systemic dimensions of bank risk and tends to become stronger for the tail of the riskier banks. The majority of these characteristics also predicted bank risk as materialized before the financial crisis.
Topic:
Global Recession, Financial Crisis, Risk, and Banking
Political Geography:
North America and United States of America