In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business cycle model. In particular, we analyze the effect of a monetary policy shock and investigate how labor market frictions affect the transmission process of monetary policy. The...

During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the...

Recently, a number of studies have made an attempt to deal with the key issue of the incompleteness of information available to the central bank when taking its monetary policy decisions. This study adds to this literature by tackling the problem with regard to the euro area. The analysis is...

We consider the properties of two monetary policy rules (monetary targeting, Taylor-type interest rate rule) in an intertemporal equilibrium model with capital accumulation and two outside assets (government bonds, fiat money). The paper shows that the long-run behaviour of the economy depends...

As of today, estimating interest rate reaction functions for the Euro Area is hampered by the short time span since the conduct of a single monetary policy. In this paper we circumvent the common use of aggregated data before 1999 by estimating interest rate reaction functions based on a panel...

This paper re-investigates the implications of monetary policy rules on changes in exchange rate, in a risk-adjusted, uncovered interest parity model with unrestricted parameters, emphasizing the importance of modeling market expectations of monetary policy. I use consensus forecasts as a proxy...

Remarks before the Society of Business Economists, London, England, March 4, 2008. ; "At present, we simply do not have the ability to adequately account for the impact globalization has on the gearing of our domestic economy. Absent that capacity, we cannot, in my opinion, confidently assume...

"The earnest men and women who make up the FOMC have no intention of squandering the bedrock capital of a central bank: the confidence the public places in our hands to keep inflation at bay while we work to bolster economic growth and restore the financial system." ; Remarks before the Progress...

Remarks before the Global Interdependence Center, Philadelphia, Pennsylvania, January 17, 2008. ; "...the FOMC does not intend to just squat and wait should economic data and sound risk management signal that monetary accommodation is required."

"In today's world, where investors can move their funds instantly from one currency to another to avoid depreciation, the price central bankers pay for high inflation is much higher than in the past. Understanding this, you can see why I am a steadfast inflation-fighting owl." ; Remarks for a...