Yannick Timmer's Books

Monetary Policy Under Labor Market Power

By: Anastasia Burya,Rui Mano,Mr. Yannick Timmer,Miss Anke Weber

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Monetary Policy Under Labor Market Power

By: Anastasia Burya,Rui Mano,Mr. Yannick Timmer,Miss Anke Weber

Using the near universe of online vacancy postings in the U.S., we study the interaction between labor market power and monetary policy. We show empirically that labor market power amplifies the labor demand effects of monetary policy, while not disproportionately affecting wage growth. A search and matching model in which firms can attract workers by either offering higher wages or posting more vacancies can rationalize these findings. We also find that vacancy postings that do not require a college degree or technology skills are more responsive to monetary policy, especially when firms have labor market power. Our results help explain the “wageless” recovery after the 2008 financial crisis and the flattening of the wage Phillips curve, especially for the low-skilled, who saw stagnant wages but a robust decline in unemployment.

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International Monetary Fund

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ISBN 13

9798400211812

Tech in Fin before FinTech: Blessing or Curse for Financial Stability?

By: Mr.Nicola Pierri,Mr.Yannick Timmer

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Tech in Fin before FinTech: Blessing or Curse for Financial Stability?

By: Mr.Nicola Pierri,Mr.Yannick Timmer

Motivated by the world-wide surge of FinTech lending, we analyze the implications of lenders’ information technology adoption for financial stability. We estimate bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware used in US commercial bank branches after mapping them to their parent bank. We find that higher intensity of IT-adoption led to significantly lower non-performing loans when the crisis hit: banks with a one standard deviation higher IT-adoption experienced 10% lower non-performing loans. High-IT-adoption banks were not less exposed to the crisis through their geographical footprint, business model, funding sources, or other observable characteristics. Loan-level analysis indicates that high-IT-adoption banks originated mortgages with better performance and did not offload low-quality loans. We apply a simple text-analysis algorithm to the biographies of top executives and find that banks led by more “tech-oriented” managers adopted IT more intensively and experienced lower non-performing loans during the crisis. Our results suggest that technology adoption in lending can enhance financial stability through the production of more resilient loans.

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International Monetary Fund

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ISBN 10

1513519255

ISBN 13

9781513519258

Discriminatory Pricing of Over-the-Counter Derivatives

By: Hau Harald,Peter Hoffmann,Sam Langfield,Mr.Yannick Timmer

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Discriminatory Pricing of Over-the-Counter Derivatives

By: Hau Harald,Peter Hoffmann,Sam Langfield,Mr.Yannick Timmer

New regulatory data reveal extensive price discrimination against non-financial clients in the FX derivatives market. The client at the 90th percentile pays an effective spread of 0.5%, while the bottom quarter incur transaction costs of less than 0.02%. Consistent with models of search frictions in over-the-counter markets, dealers charge higher spreads to less sophisticated clients. However, price discrimination is eliminated when clients trade through multi-dealer request-for-quote platforms. We also document that dealers extract rents from captive clients and market opacity, but only for contracts negotiated bilaterally with unsophisticated clients.

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International Monetary Fund

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ISBN 10

1498303773

ISBN 13

9781498303774

Dominant Currencies and External Adjustment

By: Gustavo Adler,Camila Casas,Mr.Luis M. Cubeddu,Ms.Gita Gopinath,Ms.Nan Li,Sergii Meleshchuk,Ms.Carolina Osorio Buitron,Mr.Damien Puy,Mr.Yannick Timmer

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Dominant Currencies and External Adjustment

By: Gustavo Adler,Camila Casas,Mr.Luis M. Cubeddu,Ms.Gita Gopinath,Ms.Nan Li,Sergii Meleshchuk,Ms.Carolina Osorio Buitron,Mr.Damien Puy,Mr.Yannick Timmer

The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.

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International Monetary Fund

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ISBN 10

1513512153

ISBN 13

9781513512150

The Price of Capital Goods: A Driver of Investment Under Threat

By: Weicheng Lian,Natalija Novta,Evgenia Pugacheva,Mr.Yannick Timmer,Petia Topalova

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The Price of Capital Goods: A Driver of Investment Under Threat

By: Weicheng Lian,Natalija Novta,Evgenia Pugacheva,Mr.Yannick Timmer,Petia Topalova

Over the past three decades, the price of machinery and equipment fell dramatically relative to other prices in advanced and emerging market and developing economies. Using cross-country and sectoral data, we show that the decline in the relative price of tangible tradable capital goods provided a significant impetus to the capital deepening that took place during the same time period. The broad-based decline in the relative price of machinery and equipment, in turn, was driven by the faster productivity growth in the capital goods producing sectors relative to the rest of the economy, and deeper trade integration, which induced domestic producers to lower prices and increase their efficiency. Our findings suggest an additional channel through which rising trade tensions and sluggish productivity could threaten real investment growth going forward.

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International Monetary Fund

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ISBN 10

149832343X

ISBN 13

9781498323437

The Anatomy of Banks’ IT Investments: Drivers and Implications

By: Kosha Modi,Mr. Nicola Pierri,Mr. Yannick Timmer,Mr. Maria Soledad Martinez Peria

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The Anatomy of Banks’ IT Investments: Drivers and Implications

By: Kosha Modi,Mr. Nicola Pierri,Mr. Yannick Timmer,Mr. Maria Soledad Martinez Peria

This paper relies on administrative data to study determinants and implications of US banks’ Information Technology (IT) investments, which have increased six-fold over two decades. Large and small banks had similar IT expenses a decade ago. Since then, large banks sharply increased their spending, especially those which were more exposed to competition from fintech lenders. Other local-level and bank-level factors, such as county income and bank income sources, also contribute to explain the heterogeneity in IT investments. Analysis of the mortgage market reveals that fintechs’ lending behavior is more similar to that of non-bank financial intermediaries rather than IT-savvy banks, suggesting that factors other than technology are responsible for the differences between banks and other lenders. However, both IT-savvy banks and fintech lend to lower income borrowers, pointing towards benefits for financial inclusion from higher IT adoption. Banks’ IT investments are also shown to matter for the responsiveness of bank lending to monetary policy.

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International Monetary Fund

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ISBN 13

9798400226076

Financial Frictions and the Great Productivity Slowdown

By: Mr.Romain A Duval,Mr.Gee Hee Hong,Yannick Timmer

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Financial Frictions and the Great Productivity Slowdown

By: Mr.Romain A Duval,Mr.Gee Hee Hong,Yannick Timmer

We study the role of financial frictions in explaining the sharp and persistent productivity growth slowdown in advanced economies after the 2008 global financial crisis. Using a rich cross-country, firm-level data set and exploiting quasi-experimental variation in firm-level exposure to the crisis, we find that the combination of pre-existing firm-level financial fragilities and tightening credit conditions made an important contribution to the post-crisis productivity slowdown. Specifically: (i) firms that entered the crisis with weaker balance sheets experienced decline in total factor productivity growth relative to their less vulnerable counterparts after the crisis; (ii) this decline was larger for firms located in countries where credit conditions tightened more; (iii) financially fragile firms cut back on intangible capital investment compared to more resilient firms, which is one plausible way through which financial frictions undermined productivity. All of these effects are highly persistent and quantitatively large—possibly accounting on average for about a third of the post-crisis slowdown in within-firm total factor productivity growth. Furthermore, our results are not driven by more vulnerable firms being less productive or having experienced slower productivity growth before the crisis, or differing from less vulnerable firms along other dimensions.

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International Monetary Fund

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ISBN 10

1484302591

ISBN 13

9781484302590

The Dominant Currency Financing Channel of External Adjustment

By: Camila Casas,Sergii Meleshchuk,Mr. Yannick Timmer

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The Dominant Currency Financing Channel of External Adjustment

By: Camila Casas,Sergii Meleshchuk,Mr. Yannick Timmer

We provide evidence of a new channel through which exchange rates affect trade. Using a novel identification strategy that exploits firms’ maturity structure of foreign currency debt around a large depreciation in Colombia, we show that firms experiencing a stronger debt revaluation of dominant currency debt due to a home currency depreciation compress imports relatively more while exports are unaffected. Dominant currency financing does not lead to an import compression for firms that export, hold foreign currency assets, or are active in the foreign exchange derivatives markets, as they are all hedged against a revaluation of their debt. These findings can be rationalized through the prism of a model with costly state verification and foreign currency borrowing. Quantitatively, the dominant currency financing channel explains a significant part of the external adjustment process in addition to the expenditure switching channel. Pricing exports in the dominant currency, instead of the producer’s currency, mutes the effect of dominant currency financing on trade flows.

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International Monetary Fund

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ISBN 13

9798400248788

Does IT Help? Information Technology in Banking and Entrepreneurship

By: Toni Ahnert,Sebastian Doerr,Mr. Nicola Pierri,Mr. Yannick Timmer

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Does IT Help? Information Technology in Banking and Entrepreneurship

By: Toni Ahnert,Sebastian Doerr,Mr. Nicola Pierri,Mr. Yannick Timmer

This paper analyzes the importance of information technology (IT) in banking for entrepreneurship. To guide our empirical analysis, we build a parsimonious model of bank screening and lending that predicts that IT in banking can spur entrepreneurship by making it easier for startups to borrow against collateral. We provide empirical evidence that job creation by young firms is stronger in US counties that are more exposed to ITintensive banks. Consistent with a strengthened collateral lending channel for IT banks, entrepreneurship increases more in IT-exposed counties when house prices rise. In line with the model's implications, IT in banking increases startup activity without diminishing startup quality and it also weakens the importance of geographical distance between borrowers and lenders. These results suggest that banks' IT adoption can increase dynamism and productivity.

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International Monetary Fund

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ISBN 10

1513591800

ISBN 13

9781513591803

Are Capital Goods Tariffs Different?

By: Sergii Meleshchuk,Mr.Yannick Timmer

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Are Capital Goods Tariffs Different?

By: Sergii Meleshchuk,Mr.Yannick Timmer

In this paper we demonstrate the importance of distinguishing capital goods tariffs from other tariffs. Using exposure to a quasi-natural experiment induced by a trade reform in Colombia, we find that firms that have been more exposed to a reduction in intermediate and consumption input or output tariffs do not significantly increase their investment rates. However, firms’ investment rate increase strongly in response to a reduction in capital goods input tariffs. Firms do not substitute capital with labor, but instead also increase employment, especially for production workers. Reduction in other tariff rates do not increase investment and employment. Our results suggest that a reduction in the relative price of capital goods can significantly boost investment and employment and does not seem to lead to a decline in the labor share.

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