The interaction between macroprudential policy and monetary policy: Overview

This paper presents the main findings of an International Banking Research Network initiative examining the interaction between monetary policy and macroprudential policy in determining international bank lending. We give an overview on the data, empirical specifications and results of the seven papers from the initiative. The papers are from a range of core and smaller advanced economies, and emerging markets . The main findings are as follows. First, there is evidence that macroprudential policy in recipient countries can partly offset the spillover effects of monetary policy conducted in core countries. Meanwhile, domestic macroprudential policy in core countries can also affect the cross‐border transmission of domestic monetary policy via lending abroad, by limiting the increase in lending by less strongly capitalized banks. Second, the findings highlight that studying heterogeneities across banks provides complementary insights to studies using more aggregate data and focusing on average effects. In particular, we find that individual bank characteristics such as bank size or GSIB status play a first‐order role in the transmission of these policies. Finally, the impacts differ considerably across prudential policy instruments, which also suggests the importance of more granular analysis.     

Comments: Performance measurement and joint production of intended and unintended outputs

Journal of Productivity Analysis -     

Does a bank's business model affect its capital and profitability?

We use a data-driven classification of systemically important European banks into business models based on confidential granular supervisory data and investigate whether banks following different models differ with respect to their capitalisation and profitability. Our aim is to locate the banks' business model in a risk-return space. Using an instrumental variables approach, our econometric methodology addresses potential endogeneity issues. Overall, we find that wholesale funded and securities holding banks are positioned on a relatively high risk-return trade-off plane compared with commercial banks. On the other hand, traditional commercial banks earn lower returns with moderate risk.     

Global Trade Flows: Revisiting the Exchange Rate Elasticities

Open Economies Review - This paper contributes to the debate on the magnitude of exchange rate elasticities by providing a set of price and quantity elasticities for 51 advanced and emerging-market...     

Does a better diet reduce dependence on imports? The case of Tunisia

In the last 40 years, Tunisia has experienced—as many other developing and emerging countries—a dietary transition, which led to an increase in the consumption of sugar, fats, and animal products. This transition was accompanied by an increase in noncommunicable diseases, particularly cardiovascular diseases. Using mathematical programming, we optimized the Tunisian diet using the French dietary recommendations as constraints. Then, we used the Global Trade Analysis Project's constant elasticities of substitution in order to simulate the impact of fulfilling the nutrient recommendations on international trade and domestic supply. Using this approach, we showed that the Tunisian diet is rich in carbohydrates and sugar but lacks fibers, some minerals, and vitamins. The adherence to all recommendations would induce an imperative shift to less sugar and cereal-based products by reducing the import dependence on these products, but would result a dramatic increase in the domestic supply of products from animal origin, fruits, vegetables, and legumes.     

Response to the Letter to the Editor on ‘On Quantile-based Asymmetric Family of Distributions: Properties and Inference’

Rubio (2020) points out an identification problem for the four-parameter family of two-piece asymmetric densities introduced by Nassiri & Loris (2013). This implies that statistical inference for that family is problematic. Establishing probabilistic properties for this four-parameter family however still makes sense. For the three-parameter family, there is no identification problem. The main contribution in Gijbels et al. (2019a) is to provide asymptotic results for maximum likelihood and method-of-moments estimators for all members of the three-parameter quantile-based asymmetric family of distributions.     

Subaltern Urbanization: Indian Insights for Urban Theory

The concept of subaltern urbanization is about vibrant smaller settlements—outside the metropolitan shadow—sustainably supporting a dispersed pattern of urbanization. We propose a theoretical framework which draws on an empirical research collective using both large statistical and land-use data sets and detailed case studies in non-metropolitan Indian geographies. Anchored in postcolonial urban studies, it looks beyond the logic of agglomeration and questions our understanding of settlement hierarchies and the location of social and economic innovation processes, opening up an alternative reading of urbanization that could be valuable for other regions. Local agency is core to this concept, transporting the arguments of the ordinary and the subaltern beyond large cities. Our findings, apart from emphasizing the agency of smaller settlements, highlight their multiple local and translocal flows, shaping an autonomous external engagement that could exist independently of relationships with large cities. Further, even though the rural and the urban seep into each other, they do so organically, unlike the process in planetary urbanization. Additionally, the rural-urban dichotomy remains performative, in that governance regimes influence the urbanization process. Appreciation of these dynamics can provide insights towards a better understanding of the system of human settlements, which is our goal in advancing this framework.     

Relación e influencia mutua entre el derecho internacional y el derecho europeo del trabajo

A partir de observaciones sobre el modo en que el derecho de la Unión Europea (UE) incorpora o utiliza los instrumentos internacionales destinados a garantizar la protección de los trabajadores u otros actos de las organizaciones internacionales a dicho fin, el presente artículo define las lógicas que caracterizan los vínculos, a menudo tenues pero múltiples, entre el derecho europeo y el derecho internacional del trabajo, tomado este último en su sentido más amplio. Cuatro lógicas se hacen visibles: las de la inspiración, la autonomía, la imbricacióny la mediación.     

Trade networks and colonial trade spillovers

This paper provides new empirical evidence regarding the formation of international trade networks. Established trade relations may open the gate to new trade opportunities, as they allow meeting new trade partners over time. We test this prediction and its implications for aggregate trade patterns by using the experience of ancient trade linkages between former colonies and their former colonizers (colonial trade linkages). We first show, using aggregate trade data, that former colonies have more trade with former colonizer's neighbors (colonial trade spillovers). We then show that the past export and import experience of former colonies with the colonizer have an impact on the propensity to trade similar products with third countries. In particular, the trade spillover effect is negatively related to geographical distance between third countries and the colonizer, and positively affected by their degree of economic integration.