There is widespread disagreement about the role of housing wealth in explaining consumption.  This paper exploits liquid and illiquid wealth time series from household balance sheet data for South Africa, previously constructed by the authors, to explain fluctuations in the ratios of...

In models with a representative infinitely lived household, modern versions of tax smoothing imply that the steady-state of government debt should follow a random walk.  This is unlikely to be the case in OLG economies, where the equilibrium interest rate may differ from the policy-maker's rate...

This paper studies the efficient taxation of money and factor income in intertemporal optimizing growth models with infinite horizons, transaction costs technologies and flexible prices.  Second-best optimality calls for a positive inflation tax and a non-zero capital income tax when there are...

We examine the impact of different degrees of fiscal feedback on debt in an economy with nominal rigidities where monetary policy is optimal. We look at the extent to which different degrees of fiscal feedback enhances or detracts from the ability of the monetary authorities to stabilise output...

In response to the Great Financial Crisis, the Federal Reserve, the Bank of England and many other central banks have adopted unconventional monetary policy instruments.  We investigate if one of these, purchases of long-term government debt, could be a valuable addition to conventional...

Inflation targeting central banks will be hampered without good models to assist them to be forward-looking.  Many current inflation models fail to forecast turning points adequately, because they miss key underlying long-run influences.  The world is on the cusp of a dramatic turning point in...

Disinflationary episodes are a valuable source of information for economic agents trying to learn about the economy.  This paper is especially interested in how a policymaker can themselves learn by disinflating.  The approach differs from the existing literature, which typically focuses on...

We analyse the costs of a monetary union in West Africa by means of asymmetric aggegate demand and aggregate supply shocks. Previous studies have estimated the shocks with the VAR model. We discuss the limits of this approach and apply a new technique based on the dynamic factor model. The...

The appropriate stance of monetary policy during speculative attacks has been the source of much controversy. According to the `traditional view`, a tighter monetary policy is necessary to discourage the outflow of capital, and thus prevent the exchange rate from depreciating. The `revisionist...

The theory of policy credibility has been influential in both the design of monetary policymaking institutions and in the implementation of policy. In particular, the idea that `reputation` is important has been widely accepted. However, careful attention to its assumptions and implications of...