Why are foreigners willing to invest almost $2 trillion per year in the United States? The answer affects if the existing pattern of global imbalances can persist and if the United States can continue to finance its current account deficit without a major change in asset prices and returns. This...

This paper documents four trends in Asia: (1) the increase in the magnitude of gross capital inflows and outflows; (2) the larger magnitude of gross capital inflows relative to outflows in some countries; (3) the increase in the volatility of these capital flows; and (4) the steady increase in...

Countries are using macroprudential tools more actively with the goal of improving the resilience of their broader financial systems. A growing body of evidence suggests that these tools can accomplish specific domestic goals and should reduce country vulnerability to many domestic and...

Inflation dynamics have been difficult to explain over the last decade. This paper explores if a more comprehensive treatment of globalization can help. CPI inflation has become more synchronized around the world since the 2008 crisis, but core and wage inflation have become less synchronized....

We use changes in Brazil's tax on capital inflows from 2006 to 2011 to test for direct portfolio effects and externalities from capital controls on investor portfolios. The analysis is structured based on information from investor interviews. We find that an increase in Brazil's tax on foreign...

Countries choose different strategies when responding to crises. It is challenging to assess the impact of these policy choices on key variables, however, because of endogeneity and selection bias. This paper addresses these challenges by using propensity-score matching to estimate how major...

Are capital controls and macroprudential measures successful in achieving their objectives? Assessing their effectiveness is complicated by selection bias and endogeneity; countries which change their capital-flow management measures (CFMs) often share specific characteristics and are responding...

A major challenge for monetary policy has been predicting how exchange rate movements will impact inflation. We propose a new focus: incorporating the underlying shocks that cause exchange rate fluctuations when evaluating how these fluctuations “pass-through” into import and consumer...

This paper uses a “trendy” approach to understand UK inflation dynamics. It focuses on the time series to isolate a low‐frequency and slow moving component of inflation (the trend) from deviations around this trend. We find that this slow‐moving trend explains a substantial share of UK...

Can macroprudential foreign exchange (FX) regulations on banks reduce the financial and macroeconomic vulnerabilities created by borrowing in foreign currency? To evaluate the effectiveness and unintended consequences of macroprudential FX regulation, we develop a parsimonious model of bank and...