Russia’s invasion of Ukraine triggered an energy crisis in 2022 that posed major challenges to the German economy and sparked broad debate on the economic ramifications of the marked rise in natural gas prices. In a new study, we examine the causes and consequences of this crisis and show how supply shocks and a surge in demand for natural gas storage impacted on natural gas prices and industrial production in Germany.

Financial repression is intended to help the government deleverage over time, for example following crises, by artificially lowering the yield on government bonds. However, its impact on the deb-to-GDP ratio also depends on how it affects the economy as a whole, as financial repression also influences private investment and saving decisions. In view of these macroeconomic interrelationships, financial repression can lead to a net rise in the government debt-to-GDP ratio. A new study suggests that this is what happened in the United States following the Second World War.

Global systemically important banks (G-SIBs) have to comply with additional buffer requirements owing to their size and interconnectedness within the banking sector. The buffer level banks are expected to meet depends on their exposures at a certain point in time. A new study shows that G-SIBs reduce their exposures more strongly – twice as strongly, in fact – than other banks at period-end reporting dates. As a result, the buffer level may be too low to cover the additional risk associated with G-SIBs.

Transition risk is the risk arising from the economy’s shift towards net-zero carbon emissions. Applying a novel methodology, we find that large unanticipated increases to transition risk are predominantly related to political events and can have notable macroeconomic consequences. Interestingly, in the short run these shocks do not uniformly generate inflationary pressure, challenging the prevalent notion of “greenflation.” Finally, our results highlight an important role for country-specificities, suggesting, for instance, that there may also be economic benefits attached to the transition. Overall, while international policy coordination is essential, these findings underscore the importance of tailoring policy interventions to each nation's unique economic context.

Energy prices skyrocketed as a result of the Russian war of aggression. Government stabilization measures such as the gas price brake were intended to support overall economic development. Our study compares the effects of two fiscal stabilization measures for companies: subsidies in the form of quantity-limited price guarantees and production-independent direct transfers. It turns out that the effectiveness of the measures depends on the availability of the good.

This article studies the impact of a digital euro on financial stability. Our survey findings indicate that German households are open to the digital euro – suggesting they perceive that there are benefits to accessing a central bank digital currency. However, demand for the digital euro raises concerns about strong outflows of deposits from the banking sector, with potential implications for financial stability. We study this issue in a new macroeconomic model and conclude that the digital euro – if complemented with an appropriate holding limit, i.e. the maximum digital euro amount that an individual is permitted to hold – can actually strengthen financial stability and improve welfare.

The digital transformation creates scope to make workflows and production processes more efficient. To quantify the impact of digital transformation on labour productivity, research often focuses on investments in digital technologies. This perspective neglects the fact that digital intermediate inputs, such as microchips or integrated software, also represent an important transmission channel for the efficiency gains from digitalisation. In a new study, Bundesbank researchers have examined how efficiency gains in the digital sectors have affected labour productivity in Germany, France and the United States.

Flexible working time arrangements can help parents reconcile family and work commitments. In this context, a new study examines the impact of the statutory right to work part-time on the labour supply and labour income of eligible mothers.

Forecasting current month inflation (“nowcasting”) is a highly important exercise for central banks and market participants, especially in turbulent times. In a new study, researchers investigate how millions of granular weekly scanner data from households combined with machine learning (ML) techniques can improve the nowcast of monthly German inflation.

A new research paper shows that German households increase their inflation expectations following increases in their energy prices. This effect is, however, absent for high-income and well-informed households as well as for firms. Higher inflation expectations can influence saving and consumption decisions and thus aggregate demand.