Emerging economies with inflation targets (IT) face a dilemma between fulfilling the theoretical conditions of "strict IT", which imply a fully flexible exchange rate, or applying a "flexible IT", which entails a de facto managed floating exchange rate with FX interventions to moderate exchange...

Este documento ocasional recoge dos textos que el autor ha publicado recientemente en memoria de Luis Ángel Rojo, cuya vida profesional estuvo estrechamente vinculada al Banco de España y que falleció en mayo de 2011. El primer artículo es la contribución del autor a un libro colectivo, que...

This paper presents a model featuring variable utilization rates across firms due to production inflexibilities and idiosyncratic demand uncertainty. Within a New Keynesian framework, we show how the corresponding bottlenecks and stock-outs generate asymmetries in the transmission mechanism of...

This paper analyzes the role of standing facilities in the determination of the demand for reserves in the overnight money market. In particular, we study how the asymmetric nature of the deposit and lending facilities could be used as a powerful policy tool for the simultaneous control of...

We construct a model to analyse the two types of tender procedures used by the European Central Bank in its open market operations. We assume that the ECB minimizes the expected value of a loss function that depends on the quadratic difference between the interbank rate and a target interest...

During the 1970s and early 1980s, Spain suffered high rates of inflation but inflation declined and by 1997 inflation had fallen to approximately 2 percent. To fight inflation, Spain implemented austere monetary programs, joined the EMS in 1989, enacted central bank autonomy in 1994, and...

This document contains the text of the 1998 Central Banking Lecture delivered at the London School of Economics and Political Science on June 4th. It starts by asking what factors have been behind the remarkable retreat of inflation that has taken place internationally since the mid-eighties,...

This paper shows that there exist fiscal strategies that deliver equilibrium uniqueness in a monetary economy in which the central bank follows an interest rate peg. In contrast to the fiscal theory of the price level (FTPL), such strategies always satisfy a government intertemporal budget...

In this paper I analyze the classes of price-paths arising from a non-Ricardian fiscal monetary plan along the lines of the Fiscal Theory of the Price Level (FTPL), under a price invariant nominal money supply rule in a standard Sidrauski-Brock model. I first show that fiscalist speculative...

I examine the postulates of the Fiscal Theory of the Price Level (FTPL) under a nominal interest rate peg. First, I show that the usual definition of a non-Ricardian plan involves a number of government's non-credible policy commitments, thus confuting the interpretation of the FTPL as a...