Inflation rates soared over the period 2021-2023, driving down households’ real incomes in the UK and other countries. This column uses detailed data on price and spending patterns for groceries to assess the relative impacts of inflation across rich and poor households. Significant differences in grocery price inflation experienced by rich and poor households only […]
Many market participants, analysts, and policymakers believe that interest rates will remain significantly higher than in the pre-pandemic era after the current monetary policy cycle concludes. This column argues that the combined forces of constrained aggregate demand due to global debt and a likely normalisation of the risk premium suggest a different outcome – a […]
The recent economic sanctions imposed on Russia and several other countries, including Syria, Iran, Venezuela, and North Korea, have reignited interest in the use of sanctions as a tool of foreign policy. While numerous studies have debated the effectiveness of sanctions on Russia, particularly during the initial phase in 2014, opinions remain divided. This column […]
What factors could drive transactional demand for central bank digital currency? This column analyses payment survey data to arrive at a framework for understanding the role of adoption frictions and design strategies in shaping demand for such a currency. The results of the analysis show that, while consumers may initially prefer to use more traditional […]
Despite the billions of dollars spent on development assistance annually, disagreements persist about the impact of foreign aid on developing countries. This column explores a historic episode in Korea, when missionaries from two Protestant denominations fared quite differently. Presbyterian missionaries empowered local Korean churches to aim for self-governance, while Methodists employed a hierarchical structure with […]
In an attempt to encourage firms to decarbonise their activities, many countries have started to impose a price on carbon emissions. However, carbon price uncertainty is likely discouraging investment in decarbonisation. This column presents a market-based, high-frequency measure of carbon price uncertainty in the EU Emissions Trading System to help quantify this effect. The authors […]
Consensus survey forecasts by professionals, often reported in media outlets, hide heterogeneous responses. This may be because respondents use different models to make forecasts, or they disagree on which shocks have or will hit the economy. This column describes a way to reverse-engineer the expected structural shocks from the path of individual responses in the […]
Many observers have linked the sharp rise in prices in the US and Europe since 2021 to supply chain disruptions and increasing energy costs. This column argues instead that it was predominantly driven by unexpectedly strong demand forces, not only in the US but also in the euro area. These forces resulted from a combination […]
The sharp decline in correspondent banking over the past decade has raised concerns that the associated disruptions in cross-border payments could hamper international trade and economic growth. This column combines data on terminated correspondent bank relationships with firm-level data from emerging Europe to show that when local respondent banks lose access to correspondent services, their […]
During the recent monetary policy tightening cycle, US inflation has proven persistent, with discussions emerging about the effectiveness of monetary policy with respect to previous cycles. This column shows that when looking at a measure of core inflation that is ‘super sensitive’ to monetary policy, the Fed’s interest rate hikes had and still have a […]
