While consumption habits have been utilised as a means of generating a hump shapedoutput response to monetary policy shocks in sticky-price New Keynesian economies,there is relatively little analysis of the impact of habits (particularly, external habits) onoptimal policy. In this paper we...

There is a broad consensus that the quality of the political system and its institutionsare fundamental for a country’s prosperity. The paper focuses on political events inItaly over the past 35 years and asks whether the adoption of the euro in 1999 hashelped insulate Italy’s financial...

The ECB Working Paper Series seeks to disseminate economic research on issues that are relevant to the various tasks and functions of the ECB. The Series invites submissions of research work by ECB staff and visitors. Papers by researchers not affiliated with the ECB may also be considered for...

Monetary Policy Committees differ in the way the interest rate proposal is preparedand presented in the policy meeting. In this paper we show analytically how differentarrangements could affect the voting behaviour of individual MPC members andtherefore policy outcomes. We then apply our results...

Existing work on wage bargaining (as exemplified by Cukierman and Lippi, 2001) typicallypredicts more aggressive wage setting under monetary union. This insight has not beenconfirmed by the EMU experience, which has been characterised by wage moderation,thereby eliciting criticism from Posen and...