policy analysis. It suggests that the best method of solving the puzzle implies a close connection between theory and …

supply-aggregate demand model derived from some microfoundations. Three main results are obtained. First, the results suggest … rigidity, leads to higher exchange rate volatility. With exogenous nominal price stickiness, part of the required relative …-through ; exchange rate volatility ; inflation targeting ; monetary policy ; small open economy …

the theory by analyzing a number of concrete examples. -- HJM models ; stochastic volatility ; factor models ; forward … volatility/diffusion term is stochastic in the sense of being driven by a separate hidden Markov process. Within this framework … we use the previously developed Hilbert space realization theory in order provide general necessary and sufficent …

; multivariate volatility model ; random coefficient model ; volatility forecasting …