https://hdl.handle.net/10419/209756 Sat, 24 Oct 2026 02:49:04 GMT 2026-10-24T02:49:04Z https://hdl.handle.net/10419/322338 Title: Trend Inflation in the Japanese pre-2000s: A Markov-Switching DSGE Authors: Kato, Ryo; Maih, Junior; Nishihama, Shin-Ichi Abstract: In Japan, the inflation rate declined to near-zero, whereas the monetary policy faced a zero lower bound (ZLB) in the 1990s. We examine whether trend inflation had fallen to near-zero prior to the ZLB. To achieve this, we estimate Japanese pre-2000 trend inflation developing a Markov-switching New Keynesian dynamic stochastic general equilibrium (DSGE) model in which non-zero trend inflation is explicitly incorporated as a Markov chain state. Our estimation results indicate that (i) the trend inflation remained broadly stable at 3.0-3.5 percent from the 1960s to the late 1970s prior to the second Global Oil Crisis. (ii) Then, over time, trend inflation gradually declined to nearly 1.0 percent toward the Plaza Accord in 1985. (iii) Up until 1997 when the ZLB was hit, trend inflation hovered well above zero, mostly near 1.0 percent. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/322338 2025-01-01T00:00:00Z https://hdl.handle.net/10419/322317 Title: Buy now pay (less) later: Leveraging private BNPL data in consumer banking Authors: Laudenbach, Christine; Molin, Elin; Roszbach, Kasper; Sondershaus, Talina Abstract: Buy Now, Pay Later loans (BNPL) are an increasingly popular way to finance smallticket purchases. We provide new evidence on how BNPL influences regular bank credit markets, benefiting both lenders and borrowers through information production and learning. Using data from over one million unsecured bank loan applications from a bank that also provides BNPL services, we exploit the fact that BNPL enhances the bank's ability to assess creditworthiness by incorporating transaction data beyond shared credit registers. We establish four key findings. First, BNPL users are more likely to be approved for bank loans due to lower internally assessed credit risk, while those with late BNPL payments face lower approval rates. Second, BNPL customers benefit from discounted interest rates, while the bank earns a profit margin by price discriminating among customers with a good internal payment history but di!ering external credit scores. Third, customers with a BNPL history exhibit better repayment behavior and lower default rates, partly driven by improved loan terms. Fourth, learning e!ects from prior BNPL use likely reinforce this behavior. Our findings suggest that BNPL improves risk assessment and fosters learning, enhancing credit outcomes and access for higher-risk borrowers, thereby promoting financial inclusion. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/322317 2025-01-01T00:00:00Z https://hdl.handle.net/10419/322339 Title: Re-visiting the relationship between oil prices and monetary policy Authors: Bjørnland, Hilde Christiane; Cross, Jamie; Hölz, Jonas Abstract: This paper examines how central banks respond to supply-side shocks and investigates the trade-offs they face in stabilizing inflation and output. To do so we develop a dual external instrument proxy structural vector autoregressive (SVAR) model to disentangle the macroeconomic effects of oil supply news and monetary policy shocks. Our identification strategy, which combines multiple external instruments with sign restrictions, enables a sharp distinction between structural shocks, allowing us to analyze their dynamic effects and construct policy counterfactuals for different central bank objectives. We find that both oil supply and monetary policy shocks significantly influence U.S. output and inflation. Moreover, while monetary policy can mitigate some of the output losses caused by oil price shocks, it cannot fully offset their inflationary effects. Finally, we estimate that the Federal Reserve's historical response aligns closely with a policy that places twice as much weight on inflation stabilization than on output stabilization. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/322339 2025-01-01T00:00:00Z https://hdl.handle.net/10419/322316 Title: Relationship lending and monetary policy pass-through Authors: Cao, Jin; Dubuis, Pierre; Liaudinskas, Karolis Abstract: This paper investigates the link between bank-firm lending relationships and monetary policy pass-through, focusing on episodes of low interest rates. Using administrative tax and bank supervisory data ranging from 1997 to 2019, we track the entirety of bank-firm relationships in Norway. Our analysis shows that when the central bank's policy rate is relatively low, firms that have maintained a long-term relationship with their bank experience a lower pass-through of further policy rate cuts. Specifically, we find that when the policy rate is 1.09%, each additional year of relationship decreases the pass-through of a rate cut by 2.7 percentage points. We propose a theoretical model to rationalize our empirical findings, where state-dependent differential pass-through results from the presence of firms' switching costs and banks' leverage constraint. The model highlights that the composition of relationship lengths in the economy matters for aggregate monetary policy pass-through. The proportion of long-term relationships in the Norwegian economy significantly increased after the global financial crisis. Using the model, we calculate a counterfactual aggregate pass-through for 2017, a period of monetary easing in a low-rate environment, assuming this proportion had remained at its pre-crisis level. Our findings indicate a substantial increase in aggregate pass-through, on the order of 20%. Wed, 01 Jan 2025 00:00:00 GMT https://hdl.handle.net/10419/322316 2025-01-01T00:00:00Z