How can a particular allocation and prices be implemented? Under what conditions does a policy deliver a unique competitive equilibrium? How many degrees of freedom there are in the determination of the policy variables, or how many are the instruments of policy? In this paper we analyze a...

I construct a heterogeneous agents economy that mimics the time-series behavior of the US earnings distribution from 1963 to 2003. Agents face aggregate and idiosyncratic shocks and accumulate real and financial assets. I estimate the shocks driving the model using data on income inequality, on...

The paper sets out a monetary business cycle model extended to include the production of credit that serves as an alternative to money in transactions and is subject to productivity shocks. The model provides some improvement on certain puzzles, in particular by capturing the procyclic movements...

What instruments of monetary policy must be used in order to implement a unique equilibrium? This paper revisits the issues addressed by Poole (1970) and Sargent and Wallace (1975) on the multiplicity of equilibria when policy is conducted with either interest rate or money supply rules. We show...

Modelling corruption explicitly in this paper produces changes in the predictions about how taxes affect the size of the "underground", non-market, or shadow, economy. Instead of inducing shifts towards the non-market good as in standard models without explicit corruption, here government tax...

This study of the major industrial countries' interbank markets for overnight loans links the behavior of very short-term interest rates to the operating procedures of the countries' central banks. Previous studies have focused on key features of the U.S. federal funds rate's behavior. We find...

The Eurosystem and the U.S. Federal Reserve System follow quite different approaches to the execution of monetary policy. The former institution adopts a "hands-off" approach that largely delegates to depository institutions the task of stabilizing their own liquidity at high frequency. The...

In recent years, many emergency lending mechanisms have failed dramatically in their goal of providing financing of last resort to borrowers in need for liquidity: potential borrowers have been reluctant to seek financing, fearing that a request for funds could be seen as a sign of financial...