The optimal monetary policy response to an increase in aggregate demand may be to reduce the interest rate. This apparently perverse response of interest rates can occur when the Phillips curve is non-linear.

This paper shows that the ECB's monetary policy has a heterogeneous impact on the sectoral stock market indexes in the Euro Area. We show that the heteroskedasticity based approach of Rigobon (2003) should be preferred to the event study approach.

In this paper we investigate the effects of terrorism on the financial markets. Evidence from six different financial markets shows that terror has a significant impact on both stock markets and the stock market volatility, and the magnitude of these effects are larger in emerging markets.

This paper investigates the growth effects of three different types of tax policy innovations on short-term economic growth within a Markov-switching framework applied to the U.S. economy.