Research Department Working Papers
Complementary Currencies and Liquidity: The Case of Coca-Base Money
In coca-growing villages of Colombia, where pesos are scarce, coca-base is not only used as the main input for cocaine production—it also acts as a complementary currency (CC), circulating locally as a medium of exchange for day-to-day transactions. This paper provides a clear rationale for the economically-motivated adoption of a CC in a small open economy underprovided with official currency.
June 21, 2023
High inflation disproportionately hurts low-income households
Household survey results do not support Nobel laureate economist Paul Krugman's recent suggestion that low-income families “have actually been hurt less by inflation than families with higher incomes.”
January 10, 2023
Decentralized finance proposed as alternative to traditional financial services
DeFi applications allow users to directly interact with each other to borrow, lend, insure and exchange digital assets without centralized intermediaries, such as banks and custodial exchanges.
January 03, 2023
Blockchain technology aims to expand role of digital transactions on internet
While the resources devoted to blockchain technology development have increased dramatically the past few years, the technology’s ultimate success depends on whether blockchain protocols can interact with the current economic landscape and how that occurs.
December 20, 2022
Southwest Economy, Third Quarter 2022
Big federal stimulus, home-value spike won’t ease next slump
Ultra-low interest rates and a historic housing boom that aided state and local government operations are fading, suggesting Texas policymakers may encounter additional difficulties during the next downturn.
October 03, 2022
Southwest Economy, Second Quarter 2022
Crypto miners eye Texas for energy abundance; banks view digital entrée
Cryptocurrencies have existed for over 10 years. Since their launch, cryptocurrencies have grown in quantity and market capitalization. Because they rely on decentralized technology that is computationally complex, cryptocurrencies are significant energy consumers. Texas' power-generating abilities have captured the attention of cryptocurrencies as miners move to the state.
July 01, 2022
Russia counters sanctions’ impact with currency controls, averts crisis (for now)
The Russian central bank responded to unprecedented sanctions with strict capital controls that have stabilized the value of its currency—the ruble.
May 31, 2022
Asset prices, leverage and portfolio rebalancing drive global capital flows cycle
The amount of leverage—borrowed funds relative to the value of underlying assets—increases for risky holdings during downturns, motivating their ultimate sale to achieve a more secure financial position. The opposite occurs during upswings, as risky assets gain favor.
November 30, 2021
Don’t Look to the 2013 Tantrum for the Effect of Tapering on Emerging Markets
Many emerging markets have improved their external balance sheets since the volatility evidenced during the "taper tantrum" of 2013 and would be much less vulnerable to Federal Reserve tapering today.
August 10, 2021
Emerging-market eeconomies face COVID-19 and a 'sudden stop' in capital flows
A rise in global risk at a time of investor risk aversion led to a rapid flight from emerging-market assets.
April 14, 2020