Has the Global Financial Cycle Changed Since the Crisis?
Saturday, Jan. 4, 2020 8:00 AM - 10:00 AM (PDT)
- Chair: Silvia Miranda-Agrippino, Bank of England and Northwestern University
Cross-border Spillovers: How US Financial Conditions affect Mergers and Acquisitions Around the World
AbstractWe show that financial conditions in the United States have significant spillover effects on mergers and acquisitions in both advanced and emerging economies. On average, a 100 bp easing of the IMF US Financial Conditions Index is associated with 15.7% higher value of mergers and acquisitions as a share of a country’s GDP, relative to its mean. The spillovers are stronger for more open economies, and for countries with a higher degree of foreign exchange indebtedness.
Anatomy of the Global Financial Cycle
AbstractRey (2019) documented the existence of a “global financial cycle” in capital flows, asset prices and in credit growth. This cycle moves with measures of uncertainty and monetary policy in the US. The existence of this global financial cycle means that the international trilemma no longer exists—and is instead a dilemma or “international duo”—that independent monetary policies are possible if and only if the capital account is managed. Several papers have suggested that the global financial cycle has weakened since 2008 and that international trilemma is still alive and well. We update our earlier work to test if the cycle has changed.
Nowcasting Economic Activity with Indicators of Global Financial Conditions
AbstractPurchasing Managers’ Indices (PMIs) provide timely information on economic activity at a much higher frequency than can otherwise be obtained from accounting data. This makes PMIs suitable for nowcasting GDP. We show that financial variables such as the broad dollar exchange rate contain real-time information on PMIs and on economic activity. One possible channel is through forward-looking survey responses, especially in firms that are part of global supply chains. We also examine how these relationships have changed since 2008.
- F3 - International Finance
- F6 - Economic Impacts of Globalization