爱尔兰中央银行

Regulation of Money Market Funds (MMFs) in the EU requires some categories of MMFs to consider applying liquidity management tools if they breach a minimum ‘weekly’ liquidity requirement. Anticipation of the application of such tools is a plausible amplifier of run risks. Using a larger European dataset than previously studied, we assess whether proximity to liquidity thresholds explains differences in redemptions both at the start of the COVID-19 crisis and in the following months. We assess this effect for MMFs subject to and exempt from the liquidity regulation. The evidence shows that outflows can be robustly associated with proximity to minimum liquidity requirements in the peak of the crisis for funds required to consider suspending redemptions if breaches occur. In the post-crisis phase the redemption-liquidity relationship does not appear to be specifically related to mandated consideration of the suspension of redemptions. The evidence supports consideration of countercyclical liquidity requirements or buffers that are more usable in times of stress.

Public subsidies to support the downpayments of mortgaged home purchasers can be absorbed in the housing market in a number of ways. Using granular data on loans and borrowers in Ireland, we assess three possible transmission channels of an enhancement to subsidy payments introduced in mid-2020: borrowers’ liquidity, equity (or indebtedness), and home purchase values. Our estimates suggests that out-of-pocket downpayments fall by almost the size of the increase in the subsidy value, suggesting improvement in liquidity position of eligible borrowers. We also find that this liquidity improving effect is present across all income levels, but highest in the middle of the borrower income distribution. Equity enhancements (lowering Loan-to-value ratios) and house price increases are smaller in magnitude and more prevalent among higher income borrowers.

Should debtor countries support each other during sovereign debt crises? We answer this question through the lens of a two-country sovereign-default model that we calibrate to the euro-area periphery. First, we look at cross-country bailouts. We find that whenever agents anticipate them, bailouts induce higher borrowings, and yet still enhance welfare. Second, we look at the borrowing choices of a global central borrower. We find that central borrower's policies reduce debt and improve the joint welfare of the two countries. Yet, welfare gains are uneven. In our baseline specification, one of the two countries sees a decline of welfare under the planner's rules. We conclude that central planner policies may be politically unfeasible.

This paper documents that production networks play an essential role in the job search and matching process. We document five facts about worker mobility in production networks using employer-employee data matched with the universe of firm-to-firm transactions for the Dominican Republic: (1) workers move between buyers and suppliers almost twice as much as predicted by standard labour market characteristics, (2) movers between buyers and suppliers experience larger earnings increases than other movers, (3) incumbent workers earnings increase when their firm hires from its buyers or suppliers, (4) firm-to-firm trade increases following supply chain hires, and (5) hiring from buyers or suppliers is associated with stronger firm growth. Survey evidence points to supply chain-specific human capital and better information about job applicants as the main reasons for hiring within the supply chain. These results reveal a new channel through which factors affecting the supply chain, such as international outsourcing or contracting frictions, impact labour markets.

We assess the economic impact of the fiscal expansion in response to the COVID-19 pandemic, using Slovenia as a representative small-open economy and calibrate a large-scale DSGE model by closely matching the estimated fiscal multipliers. A simulated three-scenario fiscal expansion analysis documents that a government consumption shock explains a large part of domestic fluctuations, compared to other unanticipated fiscal developments. The results also highlight the role played by private-government consumption complementarity as key transmission channel of fiscal shocks on the real business cycle.