BIS Quarterly Review, December 2024

Investor optimism prevails over uncertainty

The December issue of the BIS Quarterly Review includes analysis on recent developments in financial markets, inflation targeting, monetary policy transmission to housing markets, large language models and the architecture of international banking.

Overview

• Investor optimism prevails over uncertainty 
  Financial markets shrugged off uncertainties and pulled ahead despite lingering risks and warning signs.

Special features

• Targeted Taylor rules: monetary policy responses to demand- and supply-driven inflation
  by Cristina Manea, Boris Hofmann and Benoit Mojon
  Central banks in advanced economies responded more strongly to demand-than supply-driven inflation in recent decades.

• Large language models: a primer for economists
  by Byeungchun Kwon, Taejin Park, Fernando Perez-Cruz and Phurichai Rungcharoenkitkul
  Unlocking large language models’ potential requires careful planning, good research design and awareness of the tools’ limitations.

• Monetary policy and housing markets: insights using a novel measure of housing supply elasticity
  by Deniz Igan, Denis Gorea, Gabor Pinter and Ryan Niladri Banerjee
  The responsiveness of new housing supply to changes in house prices has declined over the past five decades.

• International finance through the lens of BIS statistics: the geography of banks' operations
  by Bryan Hardy, Patrick McGuire and Goetz von Peter
  The BIS international banking statistics reveal banks’ structure across home and host countries.