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Estimating the elasticity of intertemporal substitution using dividend tax news shocks
Full text linkThis paper studies the spending response to news about a dividend tax reform to estimate the elasticity of intertemporal substitution (EIS). The Norwegian dividend tax reform was proposed in 2003, announced in 2004, and implemented in 2006, raising the dividend tax rate by 28 percentage points. We compare the spending responses of exposed households to a control group with no dividend income. Exposed households increased spending after the news and reduced spending after implementation. We show that this behavior is only consistent with an EIS above one. Using a capitalistworker framework, we estimate the EIS to be around 1.6.publishedVersio
The cash-flow channel of monetary policy – micro evidence and macro outcomes
Full text linkRemarks by Governor Ida Wolden Bache at the 2024 Jackson Hole Economic Policy Symposium.publishedVersio
The cash-flow channel of monetary policy - evidence from billions of transactions
Full text linkWe present novel findings on the impact of monetary policy on consumer spending behavior using a newly assembled high-frequency household expenditure panel. Leveraging comprehensive weekly electronic transaction-level data for all individuals in Norway over 13 years, our study sheds light on the high-frequency consumption response to monetary policy through changes in fast-moving net interest expenses. We employ several identification strategies, including household–specific interest rate shocks arising from a natural experiment and high-frequency monetary policy instruments. We find a substantial shortrun consumption response to changes in interest payments. Relative to households with no interest exposure, households at the 90th percentile cut consumption by 1 − 1.5 percent of income within a year of a 1 percentage point policy rate hike. Our results imply a substantial marginal propensity to consume out of net interest payments, and they indicate the presence of a strong cash-flow channel of monetary policy.publishedVersio
Monetary policy shock, financial frictions and heterogeneous firms
Full text linkThis paper examines the influence of financial constraints on the transmission of monetary policy shocks across heterogeneous firms. To this end, we develop a Dynamic Stochastic General Equilibrium (DSGE) model incorporating firm heterogeneity, nominal rigidity, and financial frictions. Financial constraints hinder firms from expanding production, even under expansionary monetary policy shocks. This dynamic discourages the production of competitive firms and exerts downward pressure on factor prices, leading to the proliferation and entry of less efficient firms. The prevalence of these inefficient firms becomes more significant in economies with higher granularity, where the withdrawal of large firms from the market opens up space for less productive smaller non-producers.publishedVersio
Årstalen 2024
No full textTale av sentralbanksjef Ida Wolden Bache til Norges Banks representantskap og inviterte gjester, Oslo 15. februar 2024.publishedVersio
Climate risk and the Norwegian exchange rate
Full text linkThis study discusses whether climate risk, in the form of physical risk and transition risk, may cause an appreciation or depreciation of the Norwegian krone. Exchange rates reflect relative prices between money, goods, and services of different countries. Since countries vary greatly in their exposure to and capacity to manage different types of climate risk, assessing the exchange-rate impact of climate risk entails evaluating how much a country may lose or gain from climate risk compared to its trading partners. The study highlights several factors suggesting that the Norwegian krone may face lower climate risk over time compared to the currencies of trading partners. It also investigates empirically whether climate risk has a ected the krone exchange rate over the past decade. The results suggest that climate risk has not contributed to fluctuations in the krone exchange rate over the examined period.publishedVersio
Klimarisiko og kronekursen
Full text linkDenne studien drøfter om den norske kronen kan styrke eller svekke seg som følge av klimarisiko i form av fysisk risiko og overgangsrisiko. Valutakurser reflekterer relative priser mellom ulike lands penger, varer og tjenester. Det er stor variasjon i hvordan land er eksponert for og kan håndtere ulike typer klimarisiko. For å vurdere valutakursvirkningen av klimarisiko må man derfor vurdere hvor mye et land vil tape eller eventuelt vinne på klimarisiko sammenlignet med sine handelspartnere. Studien trekker frem flere forhold som tilsier at norske kroner kan stå overfor lavere klimarisiko over tid enn handelspartnernes valutaer. Den undersøker også empirisk om klimarisiko har påvirket kronekursen i løpet av det siste tiåret. Resultatene tyder på at klimarisiko ikke bidrar til å forklare svingninger i kronekursen over undersøkelsesperioden.publishedVersio
Trolig holder vi renten uendret ut året
Full text linkSentralbanksjef Ida Wolden Baches innledning på pressekonferanse om rentebeslutningen 7. november 2024.publishedVersio