This paper addresses some of the issues faced by macroeconomic model builders in analysing the monetary transmission mechanism. These include the sensitivity of the policy simulation results to changes in the monetary and fiscal policy rule and the introduction of forward-looking behaviour in...

In this paper, we employ a calibrated two-country version of the New Area-Wide Model (NAWM) currently under development at the European Central Bank to examine the potential benefits and spillovers of reducing labour-market distortions caused by euro area tax structures. Our analysis shows that...