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Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses from business cycle fluctuations and long-term monetary neutrality. We develop a NK framework with labour market frictions, endogenous productivity and downward wage rigidity...
Persistent link: https://www.econbiz.de/10013306762
In this paper, we argue that inflation targeting could be the future of Tunisia's monetary policy. Monetary targeting has proven to be ineffective due to the composition of reserve money, structural liquidity deficit, and higher instability of the money multiplier after 2010. Exchange rate...
Persistent link: https://www.econbiz.de/10013315123
Climate change is an existential threat to the world economy like no other, with complex, evolving and nonlinear dynamics that remain a source of great uncertainty. There is a bourgeoning literature on the economic impact of climate change, but research on how climate change affects sovereign...
Persistent link: https://www.econbiz.de/10013250076
Credit spreads rise after a monetary policy tightening, yet spread reactions are heterogeneous across firms. Exploiting information from a panel of corporate bonds matched with balance sheet data for U.S. non-financial firms, we document that firms with high leverage experience a more pronounced...
Persistent link: https://www.econbiz.de/10013250094
We show evidence that interest rate hikes slowdown loan growth but lead intermediation to migrate from banks' balance sheets to non-banks via increased securitization activity. As such, higher interest rates have the potential for unintended consequences; raising systemic risk rather than...
Persistent link: https://www.econbiz.de/10012982433
This paper argues that central bank legal protection contributes to safeguarding a central bank and its financial supervisor's independence, especially for conducting monetary and financial stability policy. However, such legal protection also entails enhanced accountability. To this end, the...
Persistent link: https://www.econbiz.de/10012912490
This paper empirically investigates international and domestic monetary policy transmission mechanisms in the Eastern Caribbean Currency Union (ECCU). We assess interest rate pass-through of both the U.S. policy rate and the ECCU minimum saving deposit rate (MSR) into domestic interest rates...
Persistent link: https://www.econbiz.de/10012918570
Credit is key to support healthy and sustainable economic growth but excess aggregate credit growth can signal the build-up of imbalances and lead to systemic financial crisis. Hence, monitoring the credit cycle is key to identifying vulnerabilities, particularly in emerging markets, which tend...
Persistent link: https://www.econbiz.de/10012889151
This paper explores the causes and consequences of fiscal dominance over monetary policy in Sub-Saharan Africa (SSA). Fiscal dominance has always been a pressing problem as it can contribute to inflation and macroeconomic instability, and increasingly so as fiscal deficits and public debt are...
Persistent link: https://www.econbiz.de/10013243067
This paper relates the inflationary impact of commodity price shocks across countries to a broad range of structural characteristics and policy frameworks over the period 2001-2010, using several approaches. The analysis suggests that economies with higher food shares in CPI baskets, fuel...
Persistent link: https://www.econbiz.de/10013098581