Research

Rare earth elements (REEs) are bottleneck inputs in many value chains, yet there is little evidence on how firm-level supply disclosures are reflected in REE spot prices and in the financial market. I compile calendar-dated disclosures from major listed producers, align them with daily spot quotes, and construct a firm–metal news shock series within a high-frequency analysis. Event windows display flatter densities with heavier tails, but no systematic rise in volatility. Local projections indicate small, metal-heterogeneous level shifts that emerge quickly and persist for several weeks. I find no statistically significant effects on the financial market, neither for broad equity indexes nor for REE-intensive firms. The paper contributes a new event-time database news shock series for REEs and provides, to my knowledge, the first high-frequency evidence on how firm disclosures are reflected in REE spot prices and the broader financial market.

Central-bank balance-sheet expansion can proceed through collateralised lending or outright asset purchases. Although both instruments create reserves, only purchases transfer duration risk from private portfolios to the public sector. This paper develops a framework in which the choice of implementation instrument determines the central bank’s repricing gap and therefore its exposure to policy-rate changes. Using monthly contributions of all 21 national central banks to the Eurosystem balance sheet from June 2016 to June 2026, the paper documents a shift from rate-matched secured lending toward fixed-rate securities financed by immediately repricing reserves. The resulting gap rose from EUR 626 billion in 2016 to EUR 3.1 trillion in 2024 and closely predicts subsequent changes in national central-bank capital. The analysis distinguishes duration risk from the credit-risk interpretation of TARGET balances, studies the institutional allocation of losses, and derives conditions under which a digital euro improves or worsens the central bank’s financial position. The empirical evidence is descriptive rather than causal, but it identifies asset composition as a distinct policy margin that reserve quantities alone do not capture.

I use intraday asset price changes around 83 ECB Governing Council meetings between January 2015 and October 2025 to ask whether the transmission of monetary policy surprises to the German yield curve changed when the euro area moved from balance sheet expansion to normalisation. Decomposing each meeting into orthogonal target, path and balance-sheet surprises, I find that the transmission did not weaken uniformly. It rotated. The balance-sheet factor transmits with a stable coefficient near unity across both regimes. What changed is the long end of the curve: a hawkish path surprise lowered thirty-year Bund yields by 1.30 basis points per basis point before 2022 and has no detectable effect since, a shift of 1.35 basis points with a wild-bootstrap p value of 0.037. In parallel, target surprises acquired a slope effect they previously lacked, flattening the two-to-ten segment by 1.46 basis points per basis point against essentially zero before. The share of meetings on which yields and equities co-move, the signature of a central bank information shock, fell from 46 to 15 percent. In a four-country panel, target surprises transmit 2.40 basis points more strongly to periphery than to core ten-year yields, but that amplification is confined to the expansion regime and disappears after July 2022. Two caveats discipline the reading. Joint stability tests do not reject coefficient constancy in any single equation, and no individual interaction survives a family-wise correction across the twenty-one tests examined; the evidence for the rotation is a consistent pattern of point estimates across maturities, classifications and robustness variants rather than a decisive rejection. Taken at face value, the estimates imply that curve sensitivities calibrated on the quantitative easing period misstate the current reaction, and that the misstatement is concentrated in the long-duration positions for which it matters most.

The holding limit on the digital euro was designed to prevent deposit flight from banks. We ask whether markets priced the design choices legislators made between 2023 and 2026. We code 22 verified event dates by their available design content before looking at any price, and add the published record of 309 disclosed lobbying meetings. A euro area bank one standard deviation more deposit-funded gains 0.05 percentage points more on an event that limits the digital euro (permutation p = 0.47). Conservative release-time alignment raises this to 0.15–0.17, some evidence of a small effect that is not robust across inference procedures; every specification excludes effects one third the size of those documented for 2020. Events that set a design parameter show no detectable effect. The same design, with strictly pre-event betas, detects an effect of the 2020 size on the day the Eurosystem report appeared. Markets appear to have reacted to early news about whether a digital euro would exist; we find no comparable response to later news about its design.

Since 2022 most euro area national central banks (NCBs) have booked large losses on bond portfolios they bought under quantitative easing and must now fund at high policy rates. Whether such losses bend monetary policy is contested and, at the level of individual decision-makers, untested. We exploit a setting in which one policy is set by a committee whose members sit on 20 separate balance sheets: income from sovereign bonds bought since 2015 is neither risk- nor income-shared, so the carry loss per unit of capital key differs sharply across NCBs. We code 1,991 passages from speeches by NCB governors between 2016 and 2026 into a rate-stance scale and relate the stance to each NCB's non-pooled carry exposure, in a design registered in advance. We find no detectable effect: 0.03 scale points per standard deviation of exposure, against a predicted positive coefficient (95% CI −0.33 to 0.40). Equivalence tests exclude effects larger than 0.34 scale points, about forty per cent of the gap between the average German and the average Italian central banker, but cannot exclude smaller ones. The estimate is stable across twelve constructions of the exposure measure and eleven robustness checks. The event design around the first published net loss gives −0.16 and is not significant. The data are informative about why: governor and half-year fixed effects absorb 84% of the variance of advocacy, leaving little room for any time-varying national condition. Stated policy preferences in the Governing Council look like a common cycle plus a stable individual type, with no detectable response to the finances of one's own institution.

The stock-bond correlation turned positive in 2022 and the balanced portfolio lost its diversification. I ask whether the correlation is the right measure of what was lost. Using 16,065 daily observations across 258 quarters of US data, I define the hedging benefit of a bond sleeve as the reduction in portfolio volatility relative to the equity sleeve alone, which depends on the correlation and on the ratio of the two sleeve volatilities and on nothing else. A Shapley decomposition attributes 99 percent of the 2015–19 to 2021–23 deterioration to the correlation channel: equity and bond volatility rose together and left their ratio nearly unchanged. The correlation focus is therefore justified for the average. It is not justified for the tail. Bonds returned +0.03 percent on the worst equity days of the post-2021 quarters against +0.33 percent before, but conditional correlations are mechanically attenuated by conditioning, and against a normality benchmark that removes this bias the post-2021 tail excess is −0.10, the most negative of any regime in the sample. The macro state that the literature uses to explain the unconditional correlation explains it (R² = 0.19) but not the tail (R² = 0.07), and in real time, with publication lags imposed, it is beaten decisively by last quarter’s realised correlation at a one-quarter horizon and only draws level at one year. Correlation-aware allocation improves the Sharpe ratio from 0.68 to 0.79, but the naive rule beats the macro model and the return difference is not distinguishable from zero.

A government that restricts civilian firearms to reduce crime and a government that disarms citizens ahead of coercion take the same observable action. I study what follows from that single fact. In a signalling model with a privately informed government, restriction cannot separate types over a wide region of the parameter space: the predatory type always has a mimicking incentive, and the informational content of firearms policy is therefore zero in equilibrium. Citizens respond to restriction by arming more, not less, which partially offsets the policy. The welfare-relevant object is the ex ante choice between constitutional entrenchment and political discretion. Entrenchment costs a known amount under a liberal government and insures against strategic disarmament under a predatory one, so it is optimal above a threshold prior π* that the calibration puts at 0.034 but that ranges from 0.017 to 0.19 across plausible parameters. The result is not that arms deter states: the model never requires civilians to win a fight. Two findings run against the motivating hypothesis. Credible universal disarmament remains first best. And the value of entrenchment is hump-shaped in institutional quality, negative in both consolidated democracies and failed states, because the probability that a constitution is needed and the probability that it binds move in opposite directions.