Stiftung Denkwerkzukunft

 

 

Petra Gerlach-Kristen received her doctorate in economics from the University of Basel, Switzerland. Before joining the Economic and Social Research Institute in Dublin, she worked at the Bank for International Settlements and the Swiss National Bank. Most of her research is policy oriented, focusing on inflation, output and interest rates, but she has also contributed to the theoretical literature on monetary policy committees. At the ESRI, she is working on the impact of financial factors on the macro economy. She is also teaching at Trinity College.

Selected Publications

Currency intervention and the global portfolio balance effect: Japanese lessons, BIS Working Papers, Nr. 389, Basel (mit Robert McCauley/Kazuo Ueda) (2012)

Managing inflation expectations in the aftermath of the Great Recession, BIS Quarterly Review (mit Peter Hördahl/Richhild Moessner) (2011)

Macroeconomic and interest rate volatility under alternative monetary operating procedures, BIS Working Papers, Nr. 319, Basel (mit Barbara Rudolf) (2010)

Seletcted Quotations

"Past experience has shown that low policy rates allow "evergreening", ie the rolling-over of non-viable loans. During the protracted run of low nominal interest rates in Japan in the 1990s, banks there permitted debtors to roll over loans on which they could afford the near zero interest payments but not repayments of principal. Banks evergreened loans instead of writing them off in order to preserve their own capital [...]. This delayed the necessary restructuring and shrinking of financial sector balance sheets. Moreover, the presence of non-viable ("zombie") firms sustained by evergreened loans probably limited competition, reduced investment and prevented the entry of new enterprises."

"[..] low nominal policy rates lead investors to take on larger risks in pursuit of higher nominal returns. In the years preceding the financial crisis, many investors targeted a nominal rate of return that they thought was appropriate based on past experience. Furthermore, institutional investors, such as insurers and pension funds, faced pressure to fulfil implied or contractual obligations made to their customers at a time when nominal returns had been higher; they looked for those returns in alternative investment opportunities."

in: BIS Annual Report 2010, Kapitel 3 (with Coauthors)