Systemic risk, interbank relations and liquidity provision by the Central Bank

We model systemic risk in an interbank market. Banks face liquidityneeds as consumers are uncertain about where they need to consume. Interbank credit lines allow to cope with these liquidity shocks while reducing the cost of maintaining reserves. However, the interbank market exposes the system to a coordination failure(gridlock equilibrium) even if all banks are solvent. When one bankis insolvent, the stability of the banking system is affected in various ways depending on the patterns of payments across locations. We investigate the ability of the banking industry to withstand the insolvency of one bank and whether the closure ofone bank generates a chain reaction on the rest of the system. Weanalyze the coordinating role of the Central Bank in preventing payments systemic repercussions and we examine the justification ofthe Too-big-to-fail-policy.

Credit markets and the propagation of monetary policy shocks

This paper analyzes the propagation of monetary policy shocks through the creation of credit in an economy. Models of the monetary transmission mechanism typically feature responses which last for a few quarters contrary to what the empirical evidence suggests. To propagate the impact of monetary shocks over time, these models introduce adjustment costs by which agents find it optimal to change their decisions slowly. This paper presents another explanation that does not rely on any sort of adjustment costs or stickiness. In our economy, agents own assets and make occupational choices. Banks intermediate between agents demanding and supplying assets. Our interpretation is based on the way banks create credit and how the monetary authority affects the process of financial intermediation through its monetary policy. As the central bank lowers the interest rate by buying government bonds in exchange for reserves, high productive entrepreneurs are able to borrow more resources from low productivity agents. We show that this movement of capital among agents sets in motion a response of the economy that resembles an expansionary phase of the cycle.

The role of central bank operating procedures in an economy with productive government spending

The choice of either the rate of monetary growth or the nominal interest rate as the instrument controlled by monetary authorities has both positive and normative implications for economic performance. We reexamine some of the issues related to the choice of the monetary policy instrument in a dynamic general equilibrium model exhibiting endogenous growth in which a fraction of productive government spending is financed by means of issuing currency. When we evaluate the performance of the two monetary instruments attending to the fluctuations of endogenous variables, we find that the inflation rate is less volatile under nominal interest rate targeting. Concerning the fluctuations of consumption and of the growth rate, both monetary policy instruments lead to statistically equivalent volatilities. Finally, we show that none of these two targeting procedures displays unambiguously higher welfare levels.

Memòria: estada a London South Bank University (Regne Unit)

Investigación producida a partir de una estancia en la London South Bank University, Reino Unido, entre los meses de setiembre y diciembre del 2005. Se estudia el trabajo sexual en el Reino Unido desde tres perspectivas diferentes. Por una parte, se trata la historia del feminismo anglosajón respecto a sus visiones sobre la prostitución, desde una aproximación a las fuentes. Por otra parte, se plantea la situación jurídico-política. Finalmente, se presenta brevemente a las principales entidades que dan apoyo al colectivo de trabajadoras del sexo en la ciudad de Londres.

Designing the Optimal Conservativeness of the Central Bank

In this paper we propose a new measure of the degree of conservativeness of an inde- pendent central bank and we derive the optimal value from the social welfare perspective. We show that the mere appointment of an independent central bank is not enough to achieve lower inflation, which may explain the mixed results found between central bank independence and inflation in the empirical literature. Further, the optimal central bank should not be too conservative. For instance, we will show that in some circumstances it will be optimal that the central bank is less conservative than society in the Rogoff sense. JEL classification: E58, E63. Keywords: Central bank; Conservativeness; Independence.

AirBooking. Reserves en línia

Implantació d'un lloc web de reserves de vol en línia. L'anàlisi i el disseny s'han documentat formalment mitjançant UML i la construcció s'ha efectuat sobre la plataforma de desenvolupament JavaEE 5.

Central de reserves de turisme rural amb tecnologia J2EE

L'objectiu principal del TFC ha estat la introducció en l'ús de l'arquitectura J2EE i en les tècniques modernes de desenvolupament d'aplicacions empresarials per a internet.

Sistema de reserves hoteleres on-line, basat en el protocol de comunicació OTA

L’origen d’aquest projecte neix en la necessitat de crear un sistema de reserves hoteleres on-line integral i amb connectivitat amb altres sistemes de reserves. S'ha optat pel protocol de comunicació OTA(Open Travel Alliance), es tracta d'un protocol de comunicació XML ideat per empreses del sector turístic dels Estats Units per la necessitat comuna d’unes especificacions tècniques que permetessin la comunicació electrònica de la informació

Rational Partisan Theory with fiscal policy and an independent central bank

The empirical evidence testing the validity of the rational partisan theory (RPT) has been mixed. In this article, we argue that the inclusion of other macroeconomic policies and the presence of an independent central bank can partly contribute to explain this inconclusiveness. This article expands Alesina s (1987) RPT model to include an extra policy and an independent central bank. With these extensions, the implications of RPT are altered signi ficantly. In particular, when the central bank is more concerned about output than public spending (an assumption made by many papers in this literature), then the direct relationship between in flation and output derived in Alesina (1987) never holds. Keywords: central bank, conservativeness, political uncertainty. JEL Classi fication: E58, E63.

How does ownership structure invfluence bank risk? Analyzing the role of managerial incentives

This paper analyzes how ownership concentration and managerial incentives influences bank risk for a large sample of US banks over the period 1997-2007. Using 2SLS simultaneous equations models, we show that ownership concentration has a positive total effect on bank risk. This is the result of a positive direct effect, which reflects monitoring and opportunistic behavior, and a negative indirect effect, which works through the design of managerial incentive contracts and reflects shareholder preferences toward risk. Large shareholders reduce bank risk by reducing the sensitivity of CEO wealth to stock volatility (Vega) and by increasing the CEO pay-performance sensitivity (Delta). In addition, we show that the direct and indirect effect of ownership concentration on bank risk depends on the type of the largest shareholder (a family, a bank, a corporation or an institutional investor), as well as, on the total shareholding held by each type as a group. Our results suggest that the positive relation between ownership concentration and risk is not the result of preferences towards more risk. Rather, they point at opportunistic behavior of large shareholders.

The Speed of the Financial Revolution: Evidence from Hoare’s Bank

Finance is important for development, yet the onset of modern economic growth in Britain lagged the British financial revolution by over a century. We present evidence from a new West-End London private bank to explain this delay. Hoare’s Bank loaned primarily to a highly select and well-born clientele, although it did not discriminate against “unknown” borrowers in the early 18th century. It could not extend credit more generally because of government restrictions (usury limits) and policies (frequent wars). Britain’s financial development could have aided growth substantially, had it not been for the rigidities and turmoil introduced by government interference.

Macroprudential policy, countercyclical bank capital buffers and credit supply: Evidence from the Spanish dynamic provisioning experiments

We analyze the impact of countercyclical capital buffers held by banks on the supplyof credit to firms and their subsequent performance. Spain introduced dynamicprovisioning unrelated to specific bank loan losses in 2000 and modified its formulaparameters in 2005 and 2008. In each case, individual banks were impacteddifferently. The resultant bank-specific shocks to capital buffers, coupled withcomprehensive bank-, firm-, loan-, and loan application-level data, allow us toidentify its impact on the supply of credit and on real activity. Our estimates showthat countercyclical dynamic provisioning smooths cycles in the supply of credit andin bad times upholds firm financing and performance.

What do outside experts bring to a committee? Evidence from the Bank of England

We test whether outside experts have information not available to insiders by usingthe voting record of the Bank of England's Monetary Policy Committee. Memberswith more private information should vote more often against conventional wisdom,which we measure as the average belief of market economists about future interest rates. We find evidence that external members indeed have information notavailable to internals, but also use a quasi-natural experiment to show they mayexaggerate their expertise to obtain reappointment. This implies that an optimalcommittee, even outside monetary policy, should potentially include outsiders, butneeds to manage career concerns.