Read the ECB Research Digest

ECB has an annual research digest which looks at key issues and the various ECB (and other) research on the same. It is issued in March of every year. I think they should make it more frequent. It is quite good and serves as a nice literature survey of the issues.  

In the March 2010 issue, following topics are covered:

  • The forgotten markets: how understanding money markets helps us to understand the financial crisis – Long quiescent and largely ignored by researchers, stress in money markets was central to the global fi nancial crisis. In this article, a number of important research insights into bank behaviour in a context of money market turmoil are reported, largely based on the work of ECB
    staff. Some directions for future work to address pressing policy issues are explored.
  • Bank lending standards and the origins and implications of the current banking crisis – This article analyses some contributing factors of the current fi nancial crisis, which was mainly originated by the accumulation of risks in banks’ loan portfolios. Once the bank risks materialised, banks reacted by tightening their lending standards, thereby reducing the supply of bank loans to the private sector for investment and consumption. This has been one of the factors contributing
    to the economic downturn.
  • Financial conditions and monetary policy – he global fi nancial crisis raised a number of novel questions concerning the most appropriate monetary policy response to fi nancial market developments. This article surveys a few ECB research papers which provide answers to some of these questions in the context of simple general equilibrium models.
  • Incorporating financial frictions into new-generation macro models – Recent work extends the New Area Wide Model to include “fi nancial frictions” in housing and investment. This article describes the model, its data and simulation  properties and shows that extending the model in this fashion offers additional perspectives of the reaction of the model to shocks.

All four are pretty topical. The last two issues in particular are going to be a big the hot topics going forward.

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