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...

We argue that endogenous and anticipated movements in interest rates lead to underestimates of the speed and magnitude of the exchange rate response to monetary policy. Employing the Romer and Romer (2004) exogenous monetary policy shock measure, we find that the effect of a one percentage point...

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...

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...

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...

We defend the forecasting performance of the FOMC from the recent criticism of Christina and David Romer.  Our argument is that the FOMC forecasts a worst-case scenario that it uses to design decisions that will work well enough (are robust) despite possible misspecification of its model. ...

This paper investigates how best to determine time-invariant policy rules in macroeconomic models with forward-looking constraints, where fully optimal policy is known to be time-inconsistent.  It proposes a new 'coefficient optimisation' approach that improves upon the timeless perspective...