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Global Economy

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      Rinku Das (Hazra)

      How Has Monetary and Regulatory Policy Affected Trading Relationships in the U.S. Repo Market?

      Sriya Anbil and Zeynep Senyuz

      Federal Reserve Board


      They analysed the effects of changes in monetary and regulatory policy on trading dynamics in the U.S. triparty repo market. Using a confidential data set of transactions, the found that the Fed’s reverse repo (RRP) facility led to a 16 percent reduction in cash lending by money market mutual funds (MMFs) eligible to transact with the Fed. They have shown that the RRP facility increased the bargaining power of MMFs on days when their borrowers, non-U.S. dealers, increased their window-dressing activity due to Basel III capital reforms. For those dealers reliant on eligible MMF funding, window dressing became more expensive, but the average rates they paid on other days remained stable because of anchoring by the facility. We also show that the RRP facility influenced the way MMFs managed their balance sheets, and directed them towards safer investments.

      International Journal of Central Banking (IJCB)- October 2022 issue

    • #112625 Reply
      Rinku Das (Hazra)

      Is Inflation Domestic or Global? Evidence from Emerging Markets-

      Rudolfs Bems, Francesca Caselli, Francesco Grigoli, and Bertrand Gruss [IMF]


      Following a period of disinflation during the 1990s and early 2000s, inflation in emerging markets has remained remarkably low. The volatility and persistence of inflation also fell considerably and remained low despite large swings in commodity prices, the global financial crisis, and periods of strong and sustained U.S. dollar appreciation. A key question is whether this improved inflation performance is sustainable or reflects global disinflationary forces that could prove temporary. The used a New Keynesian Phillips-curve framework and data for 19 large emerging market economies over 2004–18 to assess the contribution of domestic and global factors to domestic inflation dynamics. The found that long-term inflation expectations, linked to domestic factors, were the main determinant of inflation. External factors played a considerably smaller role. The results suggest that although emerging markets are increasingly integrated into the global economy, policymakers still hold significant leverage in domestic inflation developments.

      International Journal of Central Banking (IJCB)-October 2022 issue

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