In the July/August issue of Intereconomics, Silke Tober criticised a proposal put forth by Andrew Watt to solve the euro crisis through the use of monetary financing of the public sector. Tober argued that there are valid reasons to keep monetary and fiscal policy separate from one another and...

Against the background of the dramatic changes in the prices of oil and other raw materials in the recent past, this paper analyses the effects of commodity price shocks in a New Keynesian model. The focus is on the central bank's choice of inflation target and the degree of real wage rigidity....