Dr. Leonard Bocquet
JI Research Theme

Macroeconomics, labour economics and trade plus tools from network economics
 

Granular Banking Flows and Exchange-Rate Dynamics

Using data on the external assets and liabilities of global banks based in the UK, the world’s largest centre for international banking, we identify exogenous cross-border banking flows by constructing novel Granular Instrumental Variables. In line with the predictions of a new granular international banking model, we show empirically that cross-border flows have a significant causal impact on exchange rates. A 1% increase in UK-based global banks’ net external US dollar-debt position appreciates the dollar by 2% against sterling.

Professor Christian Bayer

Host(s)

JI Research Theme

Macroeconomics: Investment, Labour Markets, Heterogeneity

Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness

Enthusiasm for “greening the financial system” is welcome, but a fundamental challenge remains: financial decision makers lack the necessary information. It is not enough to know that climate change is bad. Markets need credible, digestible information on how climate change translates into material risks. To bridge the gap between climate science and real-world financial indicators, we simulate the effect of climate change on sovereign credit ratings for 109 countries, creating the world’s first climate-adjusted sovereign credit rating.

Dr. Francois Velde (dates tbc)

Host(s)

JI Research Theme

Monetary history and monetary theory

Dr. Ning Meng
JI Research Theme

International trade, industrial organization theory   

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