Research

Structural Reform

with Alexander Plekhanov,  Anna Sali and Joseph Sassoon

Chapter in EBRD's Transition Report 2022-23: Business Unusual

Link: EBRD Transition Report 2022-23 

Policy preferences and responses to high energy and food prices in emerging markets

with Alexander Plekhanov and Joseph Sassoon

VoxEU Column, November 2022

Link: VoxEU Column 

Quantitative Easing in Emerging Markets: Explaining Yield and Exchange Rate Puzzles

Abstract: During the Covid-19 pandemic, emerging markets (EMs) implemented Quantitative Easing (QE) for the first time. Using a new cross-country database of identified shocks, I show that small EM programmes generated greater falls in yields than larger schemes in advanced economies. Despite sharp yield declines, exchange rate responses were muted. These findings cannot be explained by conventional transmission channels. They are, however, explained by Sovereign Default Risk and Market Liquidity channels, which affect domestic asset demand. While negligible in advanced economies, a structural model of capital flows suggests these can reinforce or undermine QE's effectiveness in EMs and explain cross-country differences.

The Asymmetric Firm-Level Effects of Credit Easing and Tightening.

with Filippo Busetto and Iryna Kaminska

Abstract: How do firms respond to central banks’ corporate bond purchases and sales? Using new firm-level data, this paper provides fresh evidence on the effects of the Bank of England’s Corporate Bond Purchase Scheme (CBPS) and its subsequent unwind. We uncover strong asymmetry in firms’ responses: purchases make eligible firms to significantly increase sterling bond issuance, shifting their funding mix toward debt, and expand growth and investment —especially for firms reliant on domestic bond markets. By contrast,  the unwind of the programme through corporate bond sales have only limited effects on firms' financing and real outcomes. These findings suggest that firms respond much more strongly to credit easing than to credit tightening, especially those reliant on domestic bond markets.

Attitudes, Beliefs and Reforms: Measurement and Stylised Facts

with Alexander Plekhanov

Abstract: How strongly do citizens feel about different policies? How do these preferences affect structural reform? This paper proposes new, generalisable measures which quantify the strength of individuals' preferences for multiple non-pecuniary economic objectives. Using data from World Values Surveys on more than 100 economies over the period 1995-2020, our measures assess individuals' desire for environmental protection, inclusive and democratically governed societies, global integration, and economic competitiveness and resilience. We also provide a new, consistent measure of policy outcomes along these dimensions, using data compiled by the European Bank for Reconstruction and Development. Policy preferences vary markedly across economies. As economies develop, support for the green economy and inclusion becomes stronger while support for economic integration weakens. Preferences for democratic governance do not strengthen with income. Over time, preferences for a green economy and economic resilience have strengthened while desires for globally integrated, well-governed and competitive economies have weakened. Policy preferences are aligned, albeit imperfectly, with progress in reforms in respective areas, provided media is sufficiently free. The substantial variation in eco nomic policy preferences observed across societies and over time may help explain differences in policy making and outcomes. 

Government Debt and the Currency Choice of Corporate Bond Issuance

with Filippo Busetto,  Andras Lengyel and Eric Offner

International Spillovers of Monetary Policy Shocks: Evidence from a New Cross-Country Database

Low-Income Countries' Capacity to Repay the IMF: Trends and Stylized Facts

with Olivier Basdevant and Nelson Sobrinho.