The Center for Pacific Basin Studies (CPBS) promotes cooperation among central banks in the Pacific Basin and provides insight into and analysis of economic policy issues affecting the region.
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Pacific Basin Notes
Pricing Inflation Swaps in the Japanese Bond Market
Jens H. E. Christensen, Mark M. Spiegel, and Mizla Shrestha
Japanese government bond markets present a puzzling pattern. Unlike U.S. markets, where bond liquidity and other premiums have been shown to drive a wedge between prices of nominal U.S. Treasury securities and those of matching portfolios comprised of inflation-indexed bonds and derivative contracts, analysis shows no such wedge for similar asset combinations in Japanese markets.
Working Papers
The Crowding-In Effects of Local Government Debt in China
Xiaoming Li, Zheng Liu, Yuchao Peng, and Zhiwei Xu
We study how changes in the composition of Chinese local government debt influenced bank risk taking, credit allocation, and local productivity. Using confidential loan-level data and a difference-in-difference identification approach, we show that a debt-to-bond swap program for local governments implemented in 2015 significantly increased bank risk taking through a risk-weighting channel under Basel III capital regulations. The debt swap program converted bank holdings of municipal corporate debt to local government bonds, reducing banks’ risk-weighted assets. Banks responded by lowering credit spreads on loans to privately owned firms (POEs) relative to state-owned enterprises (SOEs), with significantly larger reductions in POE credit spreads in provinces with more outstanding government debt. Furthermore, the credit reallocation toward more productive private firms—a crowding in effect of the debt swap—significantly raised local productivity.
Conferences
Call for Papers: 2026 Pacific Basin Research Conference
November 20, 2026
Submission deadline: August 15, 2026
2025 Asia Economic Policy Conference: Monetary Policy in the Age of New Technologies and Structural Changes
November 20, 2025 – November 21, 2025
Federal Reserve Bank of San Francisco | San Francisco, CA
2025 West Coast Workshop in International Finance
April 4, 2025
Co-organized by the Center for Pacific Basin Studies at Santa Clara University
2024 Pacific Basin Research Conference
November 22, 2024
Federal Reserve Bank of San Francisco | San Francisco, CA
2023 Asia Economic Policy Conference: Global Linkages in a Post-Pandemic World
November 16 – November 17, 2023
Federal Reserve Bank of San Francisco | San Francisco, CA