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We find that data transparency policy reforms, reflected in subscriptions to the IMF’s Data Standards Initiatives (SDDS and GDDS), reduce the spreads of emerging market sovereign bonds. To overcome endogeneity issues regarding a country’s decision to adopt such reforms, we first show that the reform decision is largely independent of its macroeconomic development. By using an event study, we find that subscriptions to the SDDS or GDDS leads to a 15 percent reduction in the spreads one year following such reforms. This finding is robust to various sensitivity tests, including careful consideration of the interdependence among the structural reforms.

Transparencies. --- Audio-visual materials --- Pictures --- Slides (Photography) --- Banks and Banking --- Finance: General --- Investments: Bonds --- Data Transmission Systems --- International Finance: General --- General Financial Markets: General (includes Measurement and Data) --- Financial Institutions and Services: General --- Interest Rates: Determination, Term Structure, and Effects --- Methodology for Collecting, Estimating, and Organizing Macroeconomic Data --- Data Access --- Finance --- Investment & securities --- Data capture & analysis --- Sovereign bonds --- Yield curve --- Special Data Dissemination Standard (SDDS) --- Emerging and frontier financial markets --- Financial institutions --- Financial services --- Economic and financial statistics --- Financial markets --- Bonds --- Interest rates --- Data transmission systems --- Financial services industry --- United States

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While global uncertainty—measured by the VIX—has proven to be a robust global “push” factor of international capital flows, there has been no systematic study assessing the role of country-specific uncertainty as a key (pull and push) factor of international capital flows. This paper tries to fill this gap in the literature by examining the effects of country-specific uncertainty shocks on cross-border banking flows using the confidential Bank for International Settlements Locational Banking Statistics data. The dyadic structure of this data allows to disentangle supply and demand factors and to better identify the effect of uncertainty shocks on cross-border banking flows. The results of this analysis suggest that: (i) uncertainty is both a push and pull factor that robustly predicts a decrease in both outflows (retrenchment) and inflows (stops); (ii) global banks rebalance their lending towards safer foreign borrowers from local borrowers when facing higher uncertainty; (iii) this rebalancing occurs only towards advanced economies (flight to quality), but not emerging market economies.

Banks and banking. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Banks and Banking --- Finance: General --- Money and Monetary Policy --- Exports and Imports --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- International Policy Coordination and Transmission --- International Lending and Debt Problems --- General Financial Markets: General (includes Measurement and Data) --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary economics --- International economics --- Cross-border banking --- Stock markets --- Bank credit --- Emerging and frontier financial markets --- Financial services --- Financial markets --- Capital flows --- Balance of payments --- International finance --- Banks and banking --- Stock exchanges --- Credit --- Financial services industry --- Capital movements --- United States

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This paper sheds new light on the degree of international fiscal-financial spillovers by investigating the effect of domestic fiscal policies on cross-border bank lending. By estimating the dynamic response of U.S. cross-border bank lending towards the 45 recipient countries to exogenous domestic fiscal shocks (both measured by spending and revenue) between 1990Q1 and 2012Q4, we find that expansionary domestic fiscal shocks lead to a statistically significant increase in cross-border bank lending. The magnitude of the effect is also economically significant: the effect of 1 percent of GDP increase (decrease) in spending (revenue) is comparable to an exogenous decline in the federal funds rate. We also find that fiscal shocks tend to have larger effects during periods of recessions than expansions in the source country, and that the adverse effect of a fiscal consolidation is larger than the positive effect of the same size of a fiscal expansion. In contrast, we do not find systematic and statistically significant differences in the spillover effects across recipient countries depending on their exchange rate regime, although capital controls seem to play some moderating role. The extension of the analysis to a panel of 16 small open economies confirms the finding from the U.S. economy.

Fiscal policy. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Foreign Exchange --- Fiscal Policy --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- International Policy Coordination and Transmission --- International Lending and Debt Problems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- National Government Expenditures and Related Policies: General --- Externalities --- Banking --- Monetary economics --- Public finance & taxation --- Currency --- Foreign exchange --- Cross-border banking --- Bank credit --- Fiscal stimulus --- Expenditure --- Spillovers --- Financial services --- Money --- Fiscal policy --- Financial sector policy and analysis --- Exchange rate arrangements --- International finance --- Credit --- Expenditures, Public --- United States

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Central bankers often assert that low inflation and anchoring of inflation expectations are good for economic growth (Bernanke 2007, Plosser 2007). We test this claim using panel data on sectoral growth for 22 manufacturing industries for 36 advanced and emerging market economies over the period 1990-2014. Inflation anchoring in each country is measured as the response of inflation expectations to inflation surprises (Levin et al., 2004). We find that credit constrained industries—those characterized by high external financial dependence and R&D intensity and low asset tangibility—tend to grow faster in countries with well-anchored inflation expectations. The results are robust to controlling for the interaction between these characteristics and a broad set of macroeconomic variables over the sample period, such as financial development, inflation, the size of government, overall economic growth, monetary policy counter-cyclicality and the level of inflation. Importantly, the results suggest that it is inflation anchoring and not the level of inflation per se that has a significant effect on average industry growth. Finally, the results are robust to IV techniques, using as instruments indicators of monetary policy transparency and independence.

Banks and Banking --- Inflation --- Money and Monetary Policy --- Industries: Manufacturing --- Monetary Policy --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Price Level --- Deflation --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Industry Studies: Manufacturing: General --- Macroeconomics --- Finance --- Monetary economics --- Manufacturing industries --- Credit --- Manufacturing --- Real interest rates --- Short term interest rates --- Prices --- Money --- Economic sectors --- Financial services --- Interest rates --- United States

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We combine industry-level data on output and prices with monetary policy shock estimates for 105 countries to analyze how the effects of monetary policy vary with industry characteristics. Next to being interesting in their own right, our findings are informative on the importance of various transmission mechanisms (as they are thought to vary systematically with the included characteristics). Results suggest that monetary contractions reduce output by more in industries featuring assets that are more difficult to collateralize, consistent with the credit channel, followed by industries producing durables, as predicted by the interest rate channel. The credit channel is stronger during bad times as well as in countries with lower levels of financial development, in line with financial accelerator logic. We do not find support for the cost channel of monetary policy, nor for a channel running via exports. Our database (containing estimated monetary policy shocks for over 170 countries) may be of independent interest to researchers.

Macroeconomics --- Economics: General --- Accounting --- Banks and Banking --- Foreign Exchange --- Money and Monetary Policy --- Exports and Imports --- Finance: General --- Financial Risk Management --- Economic Theory --- Business Fluctuations --- Cycles --- Monetary Policy --- Economic Growth of Open Economies --- Financial Institutions and Services: General --- Public Administration --- Public Sector Accounting and Audits --- Interest Rates: Determination, Term Structure, and Effects --- Trade: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financial Markets and the Macroeconomy --- Financial Crises --- Economic & financial crises & disasters --- Economics of specific sectors --- Financial reporting, financial statements --- Banking --- Currency --- Foreign exchange --- Monetary economics --- International economics --- Finance --- Economic theory & philosophy --- Public financial management (PFM) --- Financial services --- Monetary policy --- International trade --- Credit --- Money --- Monetary tightening --- Financial sector development --- Financial markets --- Exchange rates --- Financial crises --- Currency crises --- Informal sector --- Economics --- Finance, Public --- Interest rates --- Exports --- Financial services industry --- United States