The Aftermath of Crises, Controversies and COVID-19
Paper Session
Saturday, Jan. 7, 2023 10:15 AM - 12:15 PM (CST)
- Chair: Alexis Stenfors, University of Portsmouth
Diffferences of Unconventional Monetary Policy between US and Japan
Abstract
FRB withdrew from unconventional monetary policy and has moved to restrictive monetary policy. It has raised the interest rate at unprecedented tempo. On the other hand, The bank of Japan have still continued unconventional easing policy. Why does this defference occure?I will take three ways to figure out the problem.
(1)What is unconvetional monetary policy? I will make sure of it from endogenous monetary theory.
(2)What was the aim of this policy of both central banks? Why has the Bank of Japan diviated from conventional monetary policy? The reason of it should reveal chractoristics (or aim) of current policy stance of the Bank of Japan.
(3)What kind of roles has asset markt played to price movements since the 90s? This period is calles "the age of Bubble-relay". We have observed repeat of bubble and its burst. This cyclical phenomenon might connect with stability of prices during this period and the asset movemnt have strongly affected business cycle or trends of real economy. Therefore, central banks had to pay attentions to asset market.
I will also present my though on the current situation of the bank of Japan.
The Anatomy of Three Scandals: Conspiracies, Beauty Contests and Sabotage in OTC Markets
Abstract
Until the Great Recession, the largely unregulated over-the-counter (OTC) markets had received little attention from compliance officers, regulators, and lawmakers. Perhaps more important than the lack of regulatory framework as such, the markets were widely perceived to be sufficiently large, liquid, efficient and competitive to withstand manipulative and collusive attempts by traders and banks. However, the status quo was radically altered in 2012, when it was revealed that major international banks had systematically manipulated the world’s most widely used interest rate benchmark. The ‘LIBOR scandal’ was quickly followed by a ‘Forex scandal’ and the discovery of grave misconduct in a range of other OTC benchmarks and markets. At the time of writing, government bonds traded on electronic trading platforms are under particular scrutiny. This paper draws on the concepts of conspiracies (Smith 1776), beauty contests (Keynes 1936) and sabotage (Veblen 1921) to reflect on why it took so long for the scandals to be discovered.The Evolution of Debt: An Institutionalist Perspective
Abstract
Consumer debt has risen dramatically in the US since the early 1980s. Household debt-to-disposable income went from around 60% in 1980 to 101% in 2021. As we have shown previously, rising debt levels mean that the problem of income inequality is worse than currently thought, and living standards of Americans are lower than measured. This paper looks at how two institutionalist economists explain the evolution of consumer debt and provides some policy solutions to the problem of high levels of consumer debt. For Thorstein Veblen, conspicuous consumption allows people to communicate indirectly their standing in society. He argued that people rarely live within their financial means because they want to be associated with a higher social status, and modern financing allows them to spend beyond their current income. In The Affluent Society John Kenneth Galbraith goes further, stating that emulation and persuasion leads not only to more debt but also to an eventual crash, and thus to greater economic volatility. Finally, as our work has shown, this debt also makes it harder for people to save for retirement, emergencies, and their children’s education; and it exerts a drag on consumer spending overall and economic growth since money used to repay past debt (and the interest on that debt) cannot be used to purchase new goods and services. The paper concludes with some institutionalist policy solutions to improve the issuance, repayment, and discharging of household debt in ways that will dampen the destabilization of household finances and the macroeconomy.UK Household Debt during Covid-19
Abstract
The paper looks at UK household debt during the period of the Covid-19 pandemic. It highlights unusual shifts in borrowing reflecting not only increases in debt among income-losing households, but also extraordinary debt repayments by households whose incomes were maintained, but suffered from constraints on expenditure due to lock-down regulations. The paper concludes with some remarks on the substitutability of public and private debt.The Transmission Mechanism of Stress in the International Banking System
Abstract
Significant and volatile deviations from the covered interest parity (CIP) are indicators of stress in the international banking system. This paper uses a TVP-VAR model to investigate the dynamic connectedness and spillovers of such stress between the US, the UK, Japan and the Eurozone from 4 July 2006 to 9 June 2022. To do so, we use daily price data on cross-currency basis swaps (CRSs), typically used to trade and express CIP deviations for maturities of 1 year and beyond. We also include a yield curve dimension by including prices representative of the short-term (1Y), medium-term (5Y) and long-term (10Y) to obtain a more nuanced picture of the role of market expectations. Our findings suggest that overall connectedness is highly event-dependent and peaks during periods of high volatility and market stress. However, the transmission mechanism across banking systems and yield curve maturities has evolved considerably over time, which has significant implications for policies attempting to mitigate future crises.JEL Classifications
- E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- B5 - Current Heterodox Approaches