We show how to construct optimal policy projections in Ramses, the Riksbank’s openeconomy medium-sized DSGE model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports...

Evaluating inflation-targeting monetary policy is more complicated than checking whether inflation has been on target, because inflation control is imperfect and flexible inflation targeting means that deviations from target may be deliberate in order to stabilize the real economy. A modified...

"We study the design of optimal monetary policy under uncertainty in a dynamic stochastic general equilibrium models. We use a Markov jump-linear-quadratic (MJLQ) approach to study policy design, approximating the uncertainty by different discrete modes in a Markov chain, and by taking...

Two recent proposals for overcoming the euro area crisis make the case for monetary financing of the public sector. Watt proposes that the ECB finances public investment directly, while Pâris and Wyplosz contend that public debt may be effectively restructured by burying parts of it in the...

There is some evidence that interdependencies among European banks have increased over the past 15 years and that the potential of systemic risks in banking has shifted from a national level to a European level. Whereas wholesale financial markets are considered to be highly integrated within...