Abstract In this paper, we present two models in which the introduction of a “lender of the last resort” significantly affects the banking sector. In the first model, the introduction is stabilizing. However, in the second model it is destabilizing. Both models are very well suited to...

We use the foreign exchange forecasts of the Wall Street Journal (WSJ) poll to analyze the expectation formation process of forecasters for the exchange rates of the euro and the yen vis-à-vis the U.S. dollar for the period 1999-2005. We also compare the expectation formation process with the...

This article uses the monthly Wall Street Journal poll between 2002 and 2010 to analyse whether professional economic forecasters believe in and, thus, apply Taylor-type rules for their own forecasts. Using their forecasts for the Federal Funds rate, the inflation rate and capacity utilization,...

We use the ECB's Survey of Professional Forecaster to show that euro area expectations are consistent with standard macroeconomic building blocks such as the Phillips curve, Okun's law, and the Taylor rule. Moreover, the paper finds that the financial and economic crisis of 2007-2009 did not...

The success of monetary policy in stabilizing inflation depends substantially on its influence on expectation formation of private agents. This paper provides a novel perspective on the expectation forming process of financial markets. Using forecasts for the short-term interest rate, the...

This paper addresses the question of whether financial market participants apply the framework of Taylor-type rules in their forecasts for the G7 countries. To this end, we use the Consensus Economic Forecast poll providing us a unique data set of inflation rate, interest rate and growth rate...

In this paper we use data from the Consensus Economics forecast poll to explore the strategic behavior of private sector forecasters with respect to forecasts published by the IMF and the OECD. We focus on four key macroeconomic variables for the G7 countries to analyze whether private sector...