In late 2015, the Chinese authorities launched a policy to reduce capacity in the coal and
steel industries under the wider effort of Supply-Side Structural Reforms. Around the
same time, producer price inflation in China started to pick up strongly after being trapped
in negative territory for more than fifty consecutive months. So what is behind this strong
reflation—capacity cuts in coal and steel, or a strengthening of aggregate demand? Our
empirical analyses indicate that a pickup in aggregate demand, possibly due to the
government’s stimulus package in 2015-16, was the more important driver. Capacity cuts
played a role in propping up coal and steel prices, explaining at most 40 percent of their
Mr. Paul Cashin, Mr. Kamiar Mohaddes, and Mr. Mehdi Raissi
This paper employs a dynamic multi-country framework to analyze the international
macroeconomic transmission of El Niño weather shocks. This framework comprises 21
country/region-specific models, estimated over the period 1979Q2 to 2013Q1, and accounts for
not only direct exposures of countries to El Niño shocks but also indirect effects through thirdmarkets.
We contribute to the climate-macroeconomy literature by exploiting exogenous
variation in El Niño weather events over time, and their impact on different regions crosssectionally,
to causatively identify the effects of El Niño shocks on growth, inflation, energy
and non-fuel commodity prices. The results show that there are considerable heterogeneities in
the responses of different countries to El Niño shocks. While Australia, Chile, Indonesia, India,
Japan, New Zealand and South Africa face a short-lived fall in economic activity in response to
an El Niño shock, for other countries (including the United States and European region), an El
Niño occurrence has a growth-enhancing effect. Furthermore, most countries in our sample
experience short-run inflationary pressures as both energy and non-fuel commodity prices
increase. Given these findings, macroeconomic policy formulation should take into
consideration the likelihood and effects of El Niño weather episodes.
The note delves on the U.S. housing market outlook, the potential benefits of mitigating distressed sales household deleveraging, and the recovery. Policies to facilitate labor market adjustment to reduce the large employment volatility without affecting efficient labor allocation could prevent problems. U.S. firms are hoarding money but it is likely to be spent to boost firms’ capital expenditure, rather than kept as precautionary balances. The note discusses commodity price shocks affecting Treasury inflation protected securities (TIPS), budget institutions for federal fiscal consolidation, and mortgage delinquencies in the United States.
This Selected Issues paper of the United Kingdom analyzes the official projections of public pension spending and risks, as well as the strategy to increase private pension provision. It provides a comparison of stylized facts regarding business cycle developments in the three economies, and an analysis of how these cyclical differences reflect the way monetary policy changes impact the three economies. It analyzes the policy on Economic and Monetary Union membership; and also the interest rate changes in the United Kingdom and the United States compared with that in the euro area.