"It's tough to make predictions, especially about the future." Those familiar words are no less true in the world of economic forecasting. A new study considers how far into the future it makes sense to forecast.

How much capital is needed both at the individual bank level and for the system as a whole especially in situations of macroeconomic stress? And is the capital in the system distributed across individual banks in the optimal way to cover potential systemic losses? A new study gives answers to these questions in an integrated supervisory framework.

True to the maxim that a euro can only ever be spent once, it is often thought that foreign direct investment by German firms means that those firms reduce their investment in Germany. A new study examines this hypothesis, exploring the relationship between domestic and foreign investment.

Does a less expansionary monetary policy, for example, an increase in interest rates, lead to lower inflation and dampened inflation expectations? Many empirical and theoretical studies suggest that it does. A new study, however, shows that, if inflation expectations diverge widely, a less expansionary monetary policy can lead to increased inflation and higher inflation expectations.

The productivity of many firms evolves over time. This impacts on the optimal inflation rate – the rate of price increase with the least distortionary effect on relative goods prices. Our estimates for the United States suggest that, due to firm-level productivity changes, the optimal inflation rate has dropped from somewhat over 2% in the mid-1980s to a current level of roughly 1%.