It is shown that backward-forward procedure which selects solutions in dynamic models with rational expectations may fail to give a solution when the lags are of order two.

Turkey featured a somewhat paradoxical evolution in income distribution between 1994 and 2005. During 1994-2002 (marked by the 2000-2001 financial crisis), growth was pro-poor in the sense that the income of the poor decreased less than the income of the well-off. Between 2002 and 2005, the...

The housing market is a central macroprudential policy concern in France due to the significant proportion of residential property loans in bank balance sheets and the high weight of housing in household wealth. The surge in house prices at the start of the 2000s means we cannot rule out the...

When countries decide to coordinate and form a coalition, an outsider country can take advantage of the situation and gain more than an insider, hence creating a free-rider problem that could threaten the stability of the coalition. But as far as the Euro zone is concerned, the emphasis put on...

This paper considers the impact of macroeconomic fluctuations on the optimal level of public debt. Households are subject to both aggregate and idiosyncratic risk and insurance market imperfectness prevents them from from fully insuring against risk. We find that the optimal level of public debt...

We extend the model of Leith and Wren-Lewis (2000) to the case of a monetary union. Within a two-country dynamic model with wealth private behaviours, we study the implications of stabilising public debt on monetary and fiscal policies. The model is a macroeconomic version of the Fiscal Theory...