The paper examines the effect of macroeconomic imbalances on bank lending with emphasis on the exchange rate movement, inflation differential and fiscal deficit. In the study, bank lending is modelled by gross loans and advances, assets quality and risk appetite. The panel GMM model results show...

This report offers a strategic view on the economic and inflation environment in the euro area as part of the monetary policy strategy assessment 2025. It reassesses the factors shaping the inflation and economic environment in light of the recent inflation experience, analyses changes in...

The annual inflation rate in Sri Lanka accelerated to record levels in recent years, especially after the COVID-19 pandemic. Though the inflation rate had declined to pre-pandemic levels by mid-2024, it is of great importance to identify the factors that caused hyperinflation during the COVID-19...

The monetary policy of the People's Bank of China (PBoC) during 2001-2023 is assessed in terms of Taylor and McCallum rules, as well as a proposed composite monetary policy rule. PBoC policy is found to be responsive to the gap between target and actual nominal GDP in the McCallum rule, as well...

We use an estimated medium-scale HANK model to investigate how the tradeoff between stabilizing inflation and consumption volatility varies for households with different levels of wealth. Consumption for the rich is mostly affected by demand shocks via their exposure to highly procyclical...

In the early 2020s sharp surge of inflation, unprecedentedly high levels of government debt and deficits fueled attention for the Fiscal Theory of the Price Level (FTPL). This theoretical framework for fiscally induced inflation is well-known and controversially discussed. However, empirical...

Inflation remained quiescent for several decades and then surged in 2021 and 2022. Inflation subsequently fell in 2023 and 2024. This paper investigates how the rise and fall in inflation after 2019 affected the U.S. stock market. To do this, it estimates a fully specified multi-factor model...

A Kuznets-like curve for unemployment suggests that unemployment initially rises with early economic development due to sectoral shifts but decreases as economies mature, diversify, and adapt. This explains how gross national income (GNI) per capita influences or mediates the effect of...

This article presents a game-theoretic model analyzing the strategic competition between hard and fiat money, involving a representative player and a consolidated bank (including the central bank). The findings reveal counterintuitive interactions between inflation, interest rates, and monetary...

We assess household burdens from a carbon tax with revenue recycling, comparing them to burdens from price changes during the recent cost-of-living crisis. We focus on Lithuania, an OECD country that attained high-income status a decade ago, and that recently enacted a €60/ton CO2 carbon tax...

This paper examines the pivotal role of journalists in shaping economic narratives, focusing on inflation coverage in Germany in 2022. While the media's influence on disseminating economic narratives is widely acknowledged, little research has focused on journalists, the agents responsible for...

This study investigates the key drivers and the economic and social impacts of cryptocurrency adoption. Based on panel data across 37 countries from 2020 to 2023, this research examines the interplay between cryptocurrency adoption and technology development, monetary policies, and economic and...

The consumer price index (CPI) plays a critical role in measuring inflation. Recent inflation trends, however, have raised questions about its accuracy. This paper evaluates several of these critiques, including that the CPI fails to keep up with rapid changes in consumer expenditure patterns;...

This study investigates the influences of financial performance and economic determinants (inflation rate and economic growth) on financial distress (FD) in the MENA region in the context of the contagion effect theory and Minsky's financial instability theory. This paper examines the...

The relationship between inflation and foreign direct investment (FDI) is not clear-cut in theory. In the U.S., rising inflation coupled with increased economic recovery boosted FDI immediately after the COVID-19 pandemic but suppressed it afterwards. To shed light on the relationship between...

This paper investigates how different parametrisations of the monetary policy reaction function and different mechanisms of expectation formation shape the macroeconomic outcomes in the estimated Smets-Wouters type of DSGE model. The initial macroeconomic conditions of the simulations correspond...

Examining the economies of the European Union from 2000 to 2023, we have found no strong evidence that the inflation rate has a negative impact on economic growth. In contrast, in line with conventional economic theory, higher interest rates are associated with lower economic growth. The results...

We study the long-term effects of inflation surges on inflation expectations using Germany as a laboratory. Households living in areas with higher local inflation during the hyperinflation of the 1920s expect higher inflation today, even after controlling for known determinants of historical...

This paper studies the effects of country-specific energy prices on food consumer price inflation (CPI) within a cross-country Phillips curve framework. It considers a panel of 36 OECD member and candidate economies using quarterly data from the start of 1994 to the end of 2021. We find that...

Economic crises produce rapid and sizable shifts in the demand for social support. Means-tested cash transfers, such as "social assistance" programmes and related minimum-income benefits (MIB) typically function as benefits of last-resort, filling some of the support gaps left by other...

The Covid-19 pandemic, which began in early 2020, triggered a global health and economic crisis, leading to unprecedented changes in consumer behaviour and the functioning of national economies. This article examines the impact of the pandemic and the subsequent inflationary crisis on household...

This paper examines the impact of mortgage market structures on shaping economic responses to the unprecedented interest rate and inflation dynamics of 2021-2024. We first empirically document that economies with a larger share of variable-rate mortgages exhibit stronger responses in house...

We investigate the macroeconomic effects of two recent major geopolitical events on the euro area economy, namely, the outbreak of the Israel-Hamas war and the Russian invasion of Ukraine. To take into account the heterogeneity of geopolitical events, we do not seek to identify a homogeneous...

Imports feature at all stages of production as well as in final consumption, and this is key to how tariff shocks play out. If imposed on imports in upstream sectors, import tariffs lower domestic output in downstream sectors; if imposed downstream, they raise upstream production. The aggregate...

We identify supply and demand shocks to the real price of natural gas in the Euro Area and the United States. Demand shocks are identified using exogenous temperature variations, while supply shocks are identified through a high-frequency strategy based on an extensive collection of...

This study compared standard VAR, SVAR with short-run restrictions, and SVAR with long-run restrictions to investigate the effects of oil price shocks and the foreign exchange rate (ZAR/USD) on consumer prices in South Africa after the 2008 financial crisis. The standard VAR model revealed that...