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Understanding the Gains from Wage Flexibility: The Exchange Rate Connection

Galí, Jordi; Monacelli, Tommaso - C.E.P.R. Discussion Papers - 2014

We study the gains from increased wage flexibility and their dependence on exchange rate policy, using a small open economy model with staggered price and wage setting. Two results stand out: (i) the impact of wage adjustments on employment is smaller the more the central bank seeks to stabilize...

Persistent link: https://www.econbiz.de/10011083937

Inflation Targeting and Debt: Lessons from Brazil

Favero, Carlo A.; Giavazzi, Francesco - C.E.P.R. Discussion Papers - 2004

A single variable describes, day-by-day, what investors think about the state of Brazil's economy: the Brazilian … markets' assessment of the probability that Brazil might default on its debt obligations. This is mainly because the cost of … domestic interest rates, is thus the necessary first step in order to understand macroeconomic developments in Brazil. The …

Persistent link: https://www.econbiz.de/10005123784

Managed Floating: Understanding the New International Monetary Order

Bofinger, Peter; Wollmershaeuser, Timo - C.E.P.R. Discussion Papers - 2001

Although there seems to be a broad consensus among economists that purely floating or completely fixed exchange rates (the so-called corner solutions) are the only viable alternatives of exchange rate management, many countries do not behave according to this paradigm and adopt a strategy within...

Persistent link: https://www.econbiz.de/10005114175

Has the Euro changed the Business Cycle?

Enders, Zeno; Jung, Philip; Müller, Gernot - C.E.P.R. Discussion Papers - 2012

In contrast to the notion that the exchange-rate regime is non-neutral, there is little evidence that EMU has systematically changed the European business cycle. In fact, we find the volatility of macroeconomic variables largely unchanged before and after the introduction of the euro. Exceptions...

Persistent link: https://www.econbiz.de/10011084347

Hyperbolic Discounting and Positive Optimal Inflation

Graham, Liam; Snower, Dennis J. - C.E.P.R. Discussion Papers - 2011

The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest. Recent work by Khan et al. (2003) uses a richer model but still finds deflation optimal. In an otherwise standard new Keynesian model we show that, if households have hyperbolic...

Persistent link: https://www.econbiz.de/10009643503

The role of central bank transparency for guiding private sector forecasts

Ehrmann, Michael; Eijffinger, Sylvester C W; … - C.E.P.R. Discussion Papers - 2009

There is a broad consensus in the literature that costs of information processing and acquisition may generate costly disagreements in expectations among economic agents, and that central banks may play a central role in reducing such dispersion in expectations. This paper analyses empirically...

Persistent link: https://www.econbiz.de/10008458290

Monetary Policies for Developing Countries: The Role of Institutional Quality

Huang, Haizhou; Wei, Shang-Jin - C.E.P.R. Discussion Papers - 2005

Weak public institutions, including high levels of corruption, characterize many developing countries. With a simple model, we demonstrate that institutional quality has important implications for the design of monetary policies and can produce several departures from the conventional wisdom. We...

Persistent link: https://www.econbiz.de/10005789083

Inflation Targeting in a Small Open Economy

Sutherland, Alan - C.E.P.R. Discussion Papers - 2001

A small open economy model is presented, which allows explicit treatment of uncertainty and its effects on macroeconomic behaviour. Inflation targeting is compared to the welfare maximizing monetary rule and to a fixed nominal exchange rate. It is found that flexible inflation targeting produces...

Persistent link: https://www.econbiz.de/10005791982

A Quantitative Exploration of the Opportunistic Approach to Disinflation

Aksoy, Yunus; Orphanides, Athanasios; Small, David; … - C.E.P.R. Discussion Papers - 2003

This Paper explores the quantitative implications of an approach to monetary policy that gained prominence in the United States during the 1990s. Proponents of this approach recommend that, when inflation is moderate but still above the long-run objective, the central bank should not move...

Persistent link: https://www.econbiz.de/10005123544

Monetary Misconceptions: New and Old Paradigmata and Other Sad Tales

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2000

Several recent studies imply that the response of national saving to fiscal policy is non-monotonic. In this paper, we use two data sets to search for the circumstances in which such non-monotonic responses arise: one refers to a sample of OECD countries, as in previous studies, and one to a...

Persistent link: https://www.econbiz.de/10005124252

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