The Research Roundup
September 2026 · 8 papers on markets, policy and the world economy
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This issue was generated afterwards from sources that only expose recent items, so its coverage is partial. It is a backfill, not an issue published at the time. Its summaries and tags are machine-generated from titles and abstracts and were reviewed by Mustafa Harun Sendur on 4 November 2026; corrections are marked on each paper. Except for the 1 paper, which has been only partly checked by a person: Firm Balance Sheet Liquidity, Monetary Policy Shocks, and Investment Dynamics. |
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DM Federal Reserve Board, IFDP · 18 September 2026 · Working paper
By Daniel O. Beltran, Canlin Li
In plain words
The paper builds a demand-system model to measure how U.S. Treasury supply and demand shifts affect yields, estimating sectoral elasticities with instrumental variables. It finds the market is now more price-sensitive, with a $100 billion supply increase raising five-year yields by about 3 basis points.
Key takeaways
- Yield sensitivity has risen as foreign official investors’ share fell and hedge funds’ share grew
- A $100 billion increase in Treasury supply lifts five-year yields by roughly 3 basis points
- Investor-base shifts explain a large share of past yield movements
- The framework can evaluate policy scenarios like foreign sales or Fed balance-sheet actions
Why it matters
Policymakers and market participants can use the model to gauge how large Treasury issuances or changes in investor composition may move yields, informing debt-issuance strategy and monetary-policy balance-sheet decisions.
Market focus: Developed markets. The abstract explicitly studies U.S. Treasury supply and demand, naming the United States. “U.S. Treasury supply and demand”
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DM European Central Bank Working Papers · 22 September 2026 · Working paper
In plain words
The paper examines how bank securitisation influences the transmission of monetary policy in the euro area, finding that securitising banks adjust credit supply more strongly to policy shocks than non-securitising banks. The stronger response stems from expanded lending capacity and greater sensitivity of investors to policy conditions, especially for synthetic securitisations.
Key takeaways
- Securitising banks cut lending more after a monetary tightening than matched non-securitising banks.
- The effect is larger for loans to safer borrowers with longer maturities.
- Synthetic securitisations drive most of the stronger response via significant risk transfers.
- Firms cannot fully offset tighter credit by switching to other banks.
Why it matters
Policymakers and market participants should note that securitisation can amplify the impact of rate changes on credit supply, affecting loan availability and risk pricing in the euro area banking sector.
Market focus: Developed markets. The abstract explicitly studies banks in the euro area, an advanced-economy region. “Using granular loan-level data from the euro area”
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DM Federal Reserve Bank of Dallas · 22 September 2026 · Working paper
By Colin J. Hottman, Ricardo M. Reyes-Heroles
In plain words
The paper builds a multi-region New Keynesian model and uses state-level import penetration data to estimate U.S. regional Phillips curves over 1976-2017. It finds that greater import exposure flattens the Phillips curve, accounting for roughly 40 percent of the flattening, and estimates that it lowered inflation by about 0.17 percentage point annually between 1976 and 2008.
Key takeaways
- Greater import exposure leads to significantly flatter state-level Phillips curves.
- Rising import exposure accounts for roughly 40 percent of the flattening of the U.S. Phillips curve over 1976-2017.
- The paper estimates that increased import exposure reduced U.S. inflation by about 0.17 percentage point annually between 1976 and 2008.
Why it matters
Understanding how trade exposure alters inflation dynamics informs the trade-off faced by policymakers when setting interest rates.
Wording note: Summary and takeaways were corrected against the abstract by Claude (AI assistant), on Mustafa Harun Sendur's review; reviewed by a human. The model left out the period of the 0.17 percentage point estimate (1976 to 2008) and wrote "40 %" where the abstract says roughly 40 percent.
Market focus: Developed markets. The abstract explicitly studies U.S. inflation dynamics and U.S. Phillips curve. “We study how international trade has affected U.S. inflation dynamics”
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DM Federal Reserve Bank of St. Louis · 21 September 2026 · Working paper
By Xiwen Bai, Jesús Fernández-Villaverde, Yiliang Li, Ricardo Marto, Francesco Zanetti
In plain words
The paper builds route-level measures of capacity for U.S.-bound container ships and embeds them in a general-equilibrium model to assess welfare effects of shipping disruptions. It finds that recent utilization losses were 20-40 percentage points and that the 2021 West Coast crisis and 2023-2024 Red Sea attacks reduced output by 0.69% and 0.35% respectively.
Key takeaways
- Utilization losses during disruptions were 20-40 percentage points, appearing months before visible congestion.
- The 2021 West Coast crisis cost 0.69% of output; the 2023-2024 Red Sea attacks cost 0.35% of output.
- Naval protection of Red Sea shipping yielded 0.04-0.08% output benefits at a 0.02% fiscal cost.
- Tariffs can decongest taxed routes, potentially offsetting their usual welfare loss.
Why it matters
Policymakers and market participants should note that, in the paper's model, shipping disruptions carry sizeable output losses. The paper estimates the benefits and fiscal cost of naval protection of Red Sea shipping, and separately finds that tariffs can decongest the routes they tax, which can offset their usual welfare cost.
Wording note: Summary and takeaways were corrected against the abstract by Claude (AI assistant), on Mustafa Harun Sendur's review; reviewed by a human. The model's "Why it matters" bundled two results into "modest net gains from naval protection and tariff decongestion". The naval-protection result is an estimate of benefits against a fiscal cost; the tariff result is that reduced congestion can offset the usual welfare cost in the model. The summary and takeaways are the model's, unchanged.
Market focus: Developed markets. The abstract focuses on U.S.-bound shipping routes and U.S. output impacts, naming the United States. “U.S.-bound shipping routes”
Other versions: https://ideas.repec.org/p/nbr/nberwo/35808.html
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Transversal NBER Working Papers · September 2026 · Working paper
By Pooya Molavi, Alireza Tahbaz-Salehi, Andrea Vedolin
In plain words
The paper derives a condition that expected and realized interest rates must satisfy however expectations are formed, and uses it to decompose the sensitivity of long-term yields to the short-term interest rate into contributions from expectations and risk premia. It finds that, for short- and medium-maturity bonds, this sensitivity is driven primarily by movements in expectations rather than risk premia, and documents systematic wedges between how expectations of long-term yields and of shorter-maturity yields respond.
Key takeaways
- For short- and medium-maturity bonds, the sensitivity of long-term yields to the short-term interest rate is driven primarily by movements in expectations rather than risk premia.
- There are systematic wedges between the response of long-term yield expectations and that of expectations of shorter-maturity yields over the same window.
- The authors argue that these wedges reflect structural inconsistency in subjective expectations across maturities and forecast horizons.
Why it matters
Understanding how expectations versus risk premia shape the term structure helps policymakers and market participants gauge the drivers of yield movements without assuming rational expectations.
Wording note: Summary and takeaways were corrected against the abstract by Claude (AI assistant); reviewed by a human. The model's first takeaway dropped the abstract's qualifier "for short- and medium-maturity bonds" and its second repeated it. The wedges are in how yield expectations respond across maturities, which the model's summary described as wedges "between expectations of different maturities". The tag stays Transversal, since the abstract names no economy.
Market focus: Transversal. The abstract mentions interest rates and expectations but names no specific economy or region. “the relationship between subjective expectations and the term structure of interest rates”
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EM NBER Working Papers · September 2026 · Working paper
By Illenin O. Kondo, César Sosa-Padilla, Zachary J. Swaziek
In plain words
The paper builds a quantitative sovereign debt model in which borrowers cannot default on China's subsidized loans to emerging economies but may face sudden rollover demands. It argues that this structure disciplines borrowing: governments may choose to deleverage from private markets when Chinese inflows arrive. It also studies a scenario in which China offers loans to induce a borrower's exit from international debt markets and one in which Chinese funding is suddenly withdrawn.
Key takeaways
- In the model, borrowers cannot default on the Chinese loans but may face sudden rollover demands, and the authors argue that this bilateral rollover risk without default risk disciplines recipient countries' borrowing on international markets.
- In the model, rollover-prone Chinese loans expose market debt to dilution risk, and governments may choose to deleverage from private markets when Chinese inflows arrive.
- Market debt and bond yield dynamics in the data are consistent with this disciplining effect.
- The paper studies two scenarios, a bloc-formation exercise in which China offers loans to induce exit from international debt markets and an optimal exposure problem under a sudden retrenchment of Chinese funding.
Why it matters
Understanding how China-funded sovereign debt influences market borrowing and yields helps policymakers assess financial stability risks in emerging markets.
Wording note: Summary and takeaways were corrected against the abstract by Claude (AI assistant); reviewed by a human. The model said the loans "force" governments to reduce private-market borrowing, where the abstract says governments may choose to; it turned "dynamics in the data are consistent with this effect" into "model matches observed dynamics", and presented the two scenarios as results ("China can induce exit"). The no-default feature of the loans is now stated as the model's assumption.
Market focus: Emerging markets. The abstract discusses China lending to emerging economies and its impact on those borrowers. “China's rise as a major lender to emerging economies”
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Transversal BIS Working Papers · September 2026 · Working paper
By Boris Hofmann, Xiaoxi Liu, Ilhyock Shim
In plain words
The paper uses firm-bank linked data from ten Asian emerging markets (2005-2021) to examine zombie firms. It finds zombie numbers have risen, they hurt domestic performance and growth, and exposure to them lowers inflation and growth in advanced economies via global value chains.
Key takeaways
- Zombie firms in Asian EMEs increased significantly over the past 15 years; weak banks' evergreening, the extending or renewing of loans, helped sustain them.
- Domestically, zombie prevalence reduces firm performance, crowds out healthy firms, and lowers inflation and GDP growth.
- Exposure to Asian EM zombie firms cuts inflation and growth in advanced economies through GVC and import-price channels.
- Cross-border bank linkages play little role in these spillovers.
Why it matters
Policymakers and market participants should note that zombie firms in emerging Asia can lower inflation and growth in advanced economies, mainly through global value chains and import prices.
Wording note: Summary and takeaways were corrected against the abstract by Claude (AI assistant), on Mustafa Harun Sendur's review; reviewed by a human. The model wrote that the rise in zombie firms was "driven by" weak banks' evergreening; the abstract says it was "sustained by" it. Its "Why it matters" spoke of global inflation and growth, but the study estimates the effects on advanced economies.
Market focus: Transversal. The paper estimates domestic effects in ten Asian emerging economies and, as a main finding, the spillovers to inflation and growth in advanced economies, so it concerns both groups. “the macroeconomic effects of zombie firms extend across borders” Tag note: Corrected from EM after a check against the paper by Claude (AI assistant), on Mustafa Harun Sendur's review; reviewed by a human.
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DM Journal of Political Economy · 22 September 2026 · Journal article
By Priit Jeenas
In plain words
The paper builds a heterogeneous-firm model of monetary policy transmission to investment, with financial constraints, debt issuance costs and different returns on cash and borrowing, and matches key moments of U.S. firm-level data. A counterfactual analysis shows that the rise in U.S. firms' liquid asset holdings over recent decades has significantly increased the relevance of balance sheet liquidity in monetary transmission.
Key takeaways
- Firms' balance sheet liquidity matters for how monetary policy transmits to investment.
- The model includes debt issuance costs and different returns on cash and on borrowing.
- The rise in U.S. firms' liquid asset holdings has increased the relevance of balance sheet liquidity in monetary transmission.
Why it matters
Understanding how firm liquidity influences the policy-investment link helps policymakers gauge the effectiveness of rate changes on real activity.
Wording note: Summary and takeaways were corrected against the abstract by Claude (AI assistant); not reviewed by a human. The model said liquidity holdings "amplify" transmission, but the abstract says only that the rise in holdings increased the relevance of balance sheet liquidity; it also called the model "calibrated" where the abstract says it matches key moments of the data.
Market focus: Developed markets. The abstract explicitly references U.S. firms and U.S. data. “U.S. firms' liquid asset holdings”
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