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 

Why doesn't Quantitative Easing work in the same way everywhere? Evidence from the Covid-19 pandemic. 

Abstract: Does Quantitative Easing (QE) work in the same way everywhere and, if not, what explains the differences observed? Compared to previous schemes undertaken in advanced economies, QE's impact in emerging markets defies precedent. Using event study methods, I show that smaller, emerging market QE schemes induced greater falls in bond yields than larger schemes in advanced economies. Moreover, seemingly similar announcements caused large falls in yields for some countries while having the opposite effect in others. Using a new, cross-country database of identified shocks, I argue this heterogeneity can be explained by differences in channels which were insignificant in previous QE episodes. Analysis of these structural shocks suggests that QE's heterogenous impact on the expected path of short-term rates, market liquidity, and perceptions of sovereign default risk can explain cross-country differences. I also incorporate these additional channels into a stylised structural model and examine how outcomes under optimal policy vary with their strength. Ceteris paribus, when the effect of these channels is larger, QE has greater potency as a countercyclical policy.

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

with Filippo Busetto and Iryna Kaminska

Abstract: This paper analyses the impact of the Bank of England's Corporate Bond Purchase Scheme (CBPS) and its unwind on firms'  bond market   participation, funding mix and wider economic activity.  Using synthetic controls, we find that corporate bond purchases and  sales have asymmetric effects. While purchases encourage firms to issue more bonds and fewer stocks, sales cause firms to reduce their exposure to sterling bond markets, and actively repurchase previously issued bonds. Moreover, corporate bond purchases cause widespread increases in firm size, investment, employment and profits, while sales' effects are comparatively muted and concentrated in a smaller number of firms. Our findings suggest that, while corporate bond sales have had significant effects on financial markets and the wider economy, they are asymmetric to those of previous corporate bond purchase programmes. 

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

Leading Indicators of Low-Income Countries’ Capacity to Repay the International Monetary Fund

with Olivier Basdevant and Nelson Sobrinho.