Negative policy rates can convince markets that deposit rates will remain lower-for-longer, even when current deposit rates are constrained by zero. This is the signalling channel of negative interest rates. We analyse the optimality and effectiveness of negative rates in the context of this novel transmission channel. In a stylized model, we prove two necessary conditions for optimality: time-consistency ...
Die Gier der Unternehmen treibt die Inflation, sagen viele. Klingt plausibel, aber die Evidenz dafür ist schwach. Hohe Preise, etwa für Lebensmittel oder Energie, haben eine teilweise hitzige Debatte über ”Greedflation”, ”Gierflation” oder ”Gewinninflation” entfacht. Es wird spekuliert, dass Unternehmen ihre Preise erhöhen, um höhere Gewinnmargen zu erzielen, was wiederum die Inflation treibt. Aber ...
Der 25. Geburtstag der Europäischen Zentralbank (EZB) ist ein Grund zum Feiern: Die EZB hat gegen viele Widerstände und trotz zahlreicher Krisen etwas erreicht, was viele nicht für möglich gehalten haben. Trotzdem fremdeln gerade wir Deutschen noch immer mit der EZB und tun uns schwer, den Euro und die EZB als wichtige Errungenschaften Europas zu schätzen. Wieso ist das so? Was sind die Fehler, und ...
We examine the causal relationship between US monetary policy shocks, exchange rates and currency excess returns for a sample of eight advanced countries over the period 1980M1 to 2022M11. We find that the dynamics of the US dollar exchange rate is the main driver of currency excess returns. The exchange rate is significantly affected by US monetary policy shocks, where the persistence of this shock ...
The dollar is a safe-haven currency and appreciates when global risk goes up. We investigate the dollar’s role for the transmission of global risk to the world economy within a Bayesian proxy structural vector autoregressive model. We identify global risk shocks using high-frequency asset-price surprises around narratively selected events. Global risk shocks appreciate the dollar, induce tighter global ...
Wealth transfer taxes are important instruments to counter increasing wealth inequality. Yet, inter-generational business transfers, whose distribution is particularly concentrated at the top, are inherently difficult to tax. This is due to preferential tax treatments in many countries and sophisticated tax avoidance strategies by business owners. We analyze how business transfers react to...
We construct the first measure of collateral re-use at the bank and bond level for the European repo market using a regulatory transaction dataset. We show that banks materially increase the rate of re-use in response to tightened asset scarcity induced by the Eurosystem’s asset purchase program. We find that dealers accommodate clients’ demand for safe assets rather than liquidity and profit from ...