This paper analyses how fiscal policy affects monetary policy in emerging economies. First, it conducts a test for fiscal dominance, and finds that the evidence points clearly to a regime of fiscal dominance in the case of Argentina and Brazil during the 1990s and early 2000s, while for the...

This paper explores the evolving relationship between central banks and governments in the European monetary unification process. In particular, it focuses on the institution-building phase (setting up of the ECB) and the monetary and macro-economic policy mix within EMU. I attribute the...

This paper analyses the determinants of international bank lending to the largest countries in Asia and Latin America through a framework based on "push"/"pull" factors. Our results show that both types of factors determine international bank lending. However, they differ from those of the early...

This paper surveys the institutional and operational features of the six modern currency boards. The survey is developed around three key aspects: organisation, operations and legal foundation. By laying out the facts, this survey seeks to shed light on how and why modern currency boards in...

This paper studies the relationship between inflation, output, money and interest rates in the euro area, using data spanning 1980-2000. The P model is shown to have considerable empirical support. Thus, the "price gap" or, equivalently, the "real money gap" (the gap between current real...

This paper attempts to conceptualize the debate regarding the role of asset prices and perceived financial imbalances in the formation of monetary policy from the perspective of theoretically optimal policy responses. While much of the disagreement can be reconciled within the framework of...

This paper reviews analytical work carried out by central banks that participated in the Autumn Meeting of Central Bank Economists on "The evolving inflation process" which the BIS hosted on 28-29 October 2005. The paper first discusses efforts to document the univariate statistical properties...

This overview paper examines two main issues. The first is why the exchange rate matters, especially for emerging market economies. The second is under what circumstances and how countries have dealt with the challenges posed by the exchange rate in recent years in the context of inflation...

Central bank cooperation depends on a few crucial parameters: the extent to which central bankers agree on theory (end means relationships); the extent to which they can agree on goals (social purpose); the capacity (technical and institutional) to achieve their collective goals; and whether the...

This paper argues that incorporating information about the financial cycle is important to improve measures of potential output and output gaps. Conceptually, identifying potential output with non-inflationary output is too restrictive. Potential output is seen as sustainable; yet experience...