http://www.bis.org/cbhub/list/author/author_7500/index.rss Research hub papers by author Stephen Cecchetti en http://www.bis.org/publ/work381.pdf Bank for International Settlements Working papers by Stephen G Cecchetti and Enisse Kharroubi Reassessing the impact of finance on growth 2012-07-17T17:38:59Z This paper investigates how financial development affects aggregate productivity growth. Based on a sample of developed and emerging economies, we first show that the level of financial development is good only up to a point, after which it becomes a drag on growth. Second, focusing on advanced economies, we show that a fast-growing financial sector is detrimental to aggregate productivity growth. Reassessing the impact of finance on growth 2012-07-17T17:38:59Z BIS Abstract http://www.bis.org/publ/work381.htm Full text http://www.bis.org/publ/work381.pdf Stephen Cecchetti Enisse Kharroubi Stephen G Cecchetti and Enisse Kharroubi 2012-07 Bank for International Settlements Working papers D92 E22 E44 O4 http://www.bis.org/publ/work379.pdf Bank for International Settlements Working papers by Stephen G Cecchetti and Marion Kohler When capital adequacy and interest rate policy are substitutes (and when they are not) 2012-05-07T17:38:59Z Prudential instruments are commonly seen as the tools that can be used to deliver the macroprudential policy goals of reducing the frequency and severity of financial crises. And interest rates are traditionally viewed as the means to deliver the macroeconomic stabilisation goals of low, stable inflation and sustainable, stable growth. But, at the macroeconomic level, these two sets of policy tools have quite a bit in common. We use a simple macroeconomic model to study the extent to which capital adequacy requirements and interest rates might be substitutes in meeting the objective of stabilising the economy. We find that in our model both are substitutes for achieving conventional monetary policy objectives. In addition, we show that, in principle, they can both be used to meet financial stability objectives. This implies a need to coordinate the use of macroprudential and traditional monetary policy tools, a need that has clear implications for the construction of the policy framework designed to deliver the joint objectives of macroeconomic and financial stability. When capital adequacy and interest rate policy are substitutes (and when they are not) 2012-05-07T17:38:59Z BIS Abstract http://www.bis.org/publ/work379.htm Full text http://www.bis.org/publ/work379.pdf Stephen Cecchetti Marion Kohler Stephen G Cecchetti and Marion Kohler 2012-05 Bank for International Settlements Working papers E5 G2 http://www.bis.org/publ/work352.pdf Bank for International Settlements Working papers by Stephen Cecchetti, Madhusudan Mohanty and Fabrizio Zampolli The real effects of debt 2011-09-16T17:40:59Z At moderate levels, debt improves welfare and enhances growth. But high levels can be damaging. When does debt go from good to bad? We address this question using a new dataset that includes the level of government, non-financial corporate and household debt in 18 OECD countries from 1980 to 2010. Our results support the view that, beyond a certain level, debt is a drag on growth. For government debt, the threshold is around 85% of GDP. The immediate implication is that countries with high debt must act quickly and decisively to address their fiscal problems. The longer-term lesson is that, to build the fiscal buffer required to address extraordinary events, governments should keep debt well below the estimated thresholds. Our examination of other types of debt yields similar conclusions. When corporate debt goes beyond 90% of GDP, it becomes a drag on growth. And for household debt, we report a threshold around 85% of GDP, although the impact is very imprecisely estimated. The real effects of debt 2011-09-16T17:40:59Z BIS Abstract http://www.bis.org/publ/work352.htm Full text http://www.bis.org/publ/work352.pdf Stephen Cecchetti Madhusudan Mohanty Fabrizio Zampolli Stephen Cecchetti, Madhusudan Mohanty and Fabrizio Zampolli 2011-09 Bank for International Settlements Working papers http://www.bis.org/publ/work351.pdf Bank for International Settlements Working papers by Stephen Cecchetti, Michael R King and James Yetman Weathering the financial crisis: good policy or good luck? 2011-08-08T17:38:00Z The macroeconomic performance of individual countries varied markedly during the 2007-09 global financial crisis. While China's growth never dipped below 6% and Australia's worst quarter was no growth, the economies of Japan, Mexico and the United Kingdom suffered annualised GDP contractions of 5-10% per quarter for five to seven quarters in a row. We exploit this cross-country variation to examine whether a country's macroeconomic performance over this period was the result of pre-crisis policy decisions or just good luck. The answer is a bit of both. Better-performing economies featured a better-capitalised banking sector, lower loan-to-deposit ratios, a current account surplus, high foreign exchange reserves and low levels and growth rates of private sector credit-to-GDP. In other words, sound policy decisions and institutions reduced their vulnerability to the financial crisis. But these economies also featured a low level of financial openness and less exposure to US creditors, suggesting that good luck played a part. Weathering the financial crisis: good policy or good luck? 2011-08-08T17:38:00Z BIS Abstract http://www.bis.org/publ/work351.htm Full text http://www.bis.org/publ/work351.pdf James Yetman Michael R. King Stephen Cecchetti Stephen Cecchetti, Michael R King and James Yetman 2011-08 Bank for International Settlements Working papers http://www.bis.org/publ/work309.pdf Bank for International Settlements Working papers by Stephen Cecchetti, Ingo Fender and Patrick McGuire Toward a global risk map 2010-05-27T12:46:00Z Global risk maps are unified databases that provide risk exposure data to supervisors and the broader financial market community worldwide. We think of them as giant matrices that track the bilateral (firm-level) exposures of banks, non-bank financial institutions and other relevant market participants. While useful in principle, these giant matrices are unlikely to materialise outside the narrow and targeted efforts currently being pursued in the supervisory domain. This reflects the well known trade-offs between the macro and micro dimensions of data collection and dissemination. It is possible, however, to adapt existing statistical reporting frameworks in ways that would facilitate an analysis of exposures and build-ups of risk over time at the aggregate (sectoral) level. To do so would move us significantly in the direction of constructing the ideal global risk map. It would also help us sidestep the complex legal challenges surrounding the sharing or dissemination of firm-level data, and it would support a two-step approach to systemic risk monitoring. That is, the alarms sounded by the aggregate data would yield the critical pieces of information to inform targeted analysis of more detailed data at the firm- or market-level. Toward a global risk map 2010-05-27T12:46:00Z BIS Abstract http://www.bis.org/publ/work309.htm Full text http://www.bis.org/publ/work309.pdf Ingo Fender Patrick McGuire Stephen Cecchetti Stephen Cecchetti, Ingo Fender and Patrick McGuire 2010-05 Bank for International Settlements Working papers F3 G01 G15 G21 Y1 http://www.bis.org/publ/work300.pdf Bank for International Settlements Working papers by Stephen Cecchetti, Madhusudan Mohanty and Fabrizio Zampolli The future of public debt: prospects and implications 2010-03-27T06:31:00Z Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future. A number of countries face the prospect of large and rising future costs related to the ageing of their populations. In this paper, we examine what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next several decades. Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability. The future of public debt: prospects and implications 2010-03-27T06:31:00Z BIS Abstract http://www.bis.org/publ/work300.htm Full text http://www.bis.org/publ/work300.pdf Stephen Cecchetti Madhusudan Mohanty Fabrizio Zampolli Stephen Cecchetti, Madhusudan Mohanty and Fabrizio Zampolli 2010-03 Bank for International Settlements Working papers http://www.kc.frb.org/PUBLICAT/RESWKPAP/PDF/rwp10-01.pdf Kansas City Fed Working Papers by Stephen G. Cecchetti and Craig S. Hakkio Inflation Targeting and Private Sector Forecasts 2010-01-29T18:17:00Z Transparency is one of the biggest innovations in central bank policy of the past quarter century. Modern central bankers believe that they should be as clear about their objectives and actions as possible. However, is greater transparency always beneficial? Recent work suggests that when private agents have diverse sources of information, public information can cause them to overreact to the signals from the central bank, leading the economy to be too sensitive to common forecast errors. Greater transparency could be destabilizing. While this theoretical result has clear intuitive appeal, it turns on a combination of assumptions and conditions, so it remains to be established that it is of empirical relevance. In this paper we study the degree to which increased information about monetary policy might lead to individuals coordinating their forecasts. Specifically, we estimate a series of simple models to measure the impact of inflation targeting on the dispersion of private sector forecasts of inflation. Using a panel data set that includes 15 countries over 20 years we find no convincing evidence that adopting an inflation targeting regime leads to a reduction in the dispersion of private sector forecasts of inflation. While for some specifications adoption of inflation target does seem to reduce the standard deviation of inflation forecasts, the impact is rarely precise and always small. Inflation Targeting and Private Sector Forecasts 2010-01-29T18:17:00Z Abstract http://www.kc.frb.org/PUBLICAT/RESWKPAP/Rwp10-01.htm Full text http://www.kc.frb.org/PUBLICAT/RESWKPAP/PDF/rwp10-01.pdf Stephen Cecchetti Craig S. Hakkio Stephen G. Cecchetti and Craig S. Hakkio 2010-01 Kansas City Fed Working Papers http://www.bis.org/publ/qtrpdf/r_qt0909f.pdf Bank for International Settlements Quarterly Review by Stephen G Cecchetti, Jacob Gyntelberg and Marc Hollanders Central counterparties for over-the-counter derivatives 2009-09-14T07:18:00Z Central counterparties for over-the-counter derivatives 2009-09-14T07:18:00Z BIS Abstract http://www.bis.org/publ/qtrpdf/r_qt0909f.htm Full text http://www.bis.org/publ/qtrpdf/r_qt0909f.pdf Marc Hollanders Jacob Gyntelberg Stephen Cecchetti Stephen G Cecchetti, Jacob Gyntelberg and Marc Hollanders 2009-09-14 Bank for International Settlements Quarterly Review http://www.bis.org/publ/qtrpdf/r_qt0812f.pdf Bank for International Settlements Quarterly Review by Stephen G Cecchetti and Richhild Moessner Commodity prices and inflation dynamics 2008-12-08T10:20:00Z Commodity prices and inflation dynamics 2008-12-08T10:20:00Z BIS Abstract http://www.bis.org/publ/qtrpdf/r_qt0812f.htm Full text http://www.bis.org/publ/qtrpdf/r_qt0812f.pdf Richhild Moessner Stephen Cecchetti Stephen G Cecchetti and Richhild Moessner 2008-12-08 Bank for International Settlements Quarterly Review http://www.bcentral.cl/eng/studies/working-papers/pdf/dtbc399.pdf Central Bank of Chile Working Papers by Stephen G. Cecchetti, Stefan Krause Inflation Targeting versus Price-Path Targeting: Looking For Improvements 2007-01-25T17:34:00Z Price stability is now the paramount objective for the vast majority of modern central bankers. Combined with changes in central bank structure, this policy framework has yielded low and stable inflation that has brought with it high and stable growth. Taking recent successes as a starting point, we look at the possibility for further improvements. Could countries benefit by shifting from inflation targeting to price-path targeting? Or, should policymakers adopt a hybrid between these two extremes? Whether the optimal rule is pure inflation targeting, pure price-path targeting, or some hybrid depends on the country’s output persistence. Our discussion in this paper focuses not only on hybrid rules, also on the horizon over which such rules should be evaluated. Specifically, we examine the equivalence between a rule with a high weight on inflation targeting that is evaluated only infrequently and one with a high weight on the price-path that is evaluated often. For each country, we are able to derive a horizon for target evaluation that would result in optimal policy. The general result is that when deviations of output from its potential are less persistent, the optimal horizon for target evaluation will be shorter. Inflation Targeting versus Price-Path Targeting: Looking For Improvements 2007-01-25T17:34:00Z Abstract http://www.bcentral.cl/eng/studies/working-papers/htm/399.htm Full text http://www.bcentral.cl/eng/studies/working-papers/pdf/dtbc399.pdf Stephen Cecchetti Stefan Krause Stephen G. Cecchetti, Stefan Krause 2006-12 Central Bank of Chile Working Papers http://www.cnb.cz/miranda2/export/sites/www.cnb.cz/en/research/research_publications/cnb_wp/download/cnbwp_2005_14.pdf Czech National Bank Working papers by Stephen G. Cecchetti The Brave New World of Central Banking: The Policy Challenges Posed by Asset Price Booms and Busts 2006-06-02T11:13:59Z The Brave New World of Central Banking: The Policy Challenges Posed by Asset Price Booms and Busts 2006-06-02T11:13:59Z Abstract http://www.cnb.cz/en/research/research_publications/cnb_wp/2005/cnbwp_2005_14.html Full text http://www.cnb.cz/miranda2/export/sites/www.cnb.cz/en/research/research_publications/cnb_wp/download/cnbwp_2005_14.pdf Stephen Cecchetti Stephen G. Cecchetti 2005-12 Czech National Bank Working papers http://www.bis.org/publ/work185.pdf Bank for International Settlements Working papers by Stephen Cecchetti and Guy Debelle Has the inflation process changed? 2005-11-23T18:17:00Z Has the inflation process changed? 2005-11-23T18:17:00Z BIS Abstract http://www.bis.org/publ/work185.htm Full text http://www.bis.org/publ/work185.pdf Guy Debelle Stephen Cecchetti Stephen Cecchetti and Guy Debelle 2005-11 Bank for International Settlements Working papers J31 J52