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Monetary Policy Implementation with an Ample Supply of Reserves (Federal Reserve Bank of Atlanta, 47 page read) After last year’s repo spike this study looks at whether low or high reserve supplies at major central banks offer a more stable monetary policy. Unsurprisingly, the paper finds the Fed’s current policy of “ample reserves” to be the most prudent.
Predicting Downside Risks to House Prices and Macro-Financial Stability (IMF, 47 page read) IMF uses current house price overvaluation, excessive credit growth, and tighter financial conditions to jointly forecast higher house-price-at-risk (HaR) up to three years ahead. Tighter macroprudential policy is found to be the most effective way of limiting downside risks to house prices.
The Euro Area Bond Free Float and the Implications for QE (Wiley, 35 page read) The authors construct a new measure of “free float” to estimate the impact of ECB QE on bond yields, growth and inflation. They estimate QE reduced 10‐year bond yields in the Euro Area by around 30bps in 2015, and in 2016 produced a 0.2 positive impact on the output gap and 0.3pp on inflation.