PEGFA Research Seminars 2023-24: Alberto Botta & Adotey Bing-Pappoe

11th Oct 2023 1pm - 2:30pm

Campus

The Institute of Political Economy, Governance, Finance and Accountability invites you to its Research Seminar Series 2023-24.

Our first seminar will feature PEGFA experts Dr Alberto Botta and Adotey Bing-Pappoe.

QA075 1.00 - 2.30pm Dr Alberto Botta will be presenting "Same old song: On the macroeconomic and distributional effects of leaving a Low Interest Rate Environment".

Please find the abstract here:

This paper analyses the macroeconomic and distributional implications of central banks’ decisions to raise interest rates after a prolonged period at near the Zero Lower Bound (ZLB). The main goal of our study is to assess the interaction between monetary policy, inequality, and financial fragility, in a financialized economic system. Financialization is here portrayed as the presence in the economy of complex financial products, i.e., asset-backed securities, produced via the securitization of banks’ loans. We do so in the context of a hybrid Agent-Based Model (ABM). We first compare the prevailing macroeconomic and financial features of a low interest rate environment (LIRE) with respect to a “Great Moderation”(GM)-like setting. As expected, we show that LIRE tends to stimulate faster growth and higher employment, and to reduce income and wealth inequality, as well as (poor) households’ indebtedness. Consistent with existing empirical literature, this comes at the cost of higher inflation and some signs of financial system’s fragility, i.e., lower banks’ profitability and Capital Adequacy Ratio (CAR), and higher “search for risk” given by credit extension to poorer households. We then show that increases in the central bank’s policy rate, as motivated by the central bank’s willingness to reduce inflation, effectively curb price dynamics and accomplish with central bank’s inflation targeting mandate. Higher interest rates also improve commercial banks’ CAR and profitability. However, they also cause a pronounced increase in non-performing loans (stronger than what possibly observed in a GM scenario) and some worrisome macro-financial dynamics. In fact, higher interest rates give rise to higher households’ and overall economy indebtedness as allowed by wealthier households’ demand for high-yield complex financial products and mounting securitization. We finally show how financialization structurally changes the functioning of the economy and the behaviour of central banks. Financialization actually contributes to create a (private sector) debt-led economy, which becomes structurally more resistant to central bank’s attempts to control inflation. Central bank’s reaction in terms of higher interest rates could likely come with perverse distributional consequences.

Please find the working paper here.

Adotey Bing-Pappoe will be presenting "Promoting Cooperatives in Africa -  Researching the Enabling and Inhibiting factors Impacting cooperative development in Africa".

Please see the abstract here:

This presentation describes the initial stages of a research project to understand the enabling and inhibiting factors impacting cooperative development in Africa while promoting cooperative formation. The discussion covers the first steps and challenges encountered in setting up the project, the process of designing the research approach for the studies to be undertaken, the steps taken to identify and adopt a financing mechanism to support cooperatives, and finally we present an overview of the cooperative development landscape in Africa at the present moment.

Click here to join the seminar via Microsoft Teams.

We look forward to seeing you there!

Please find the entire programme for this year's Research Seminar Series here.

BOOKING REQUIRED

Further details