When a policymaker is better informed than the public, public beliefs about the hidden informationemerge as additional state variables, managed by the policymaker. General methodsare presented to compute optimal commitment and discretion policies.Under commitment, policy is additive in two...

Monetary policy is most effective when public beliefs about future policies are activelymanaged. This is the appeal of policy rules and commitment strategies, typically absent underdiscretion. But when a policymaker has some private information — as is the case in reality— belief management...

This study evaluates the effectiveness of Japan's unconventional monetary policies over the past quarter century within a unified term structure framework. It specifically examines the impact of the Bank of Japan's (BOJ) outcome-based forward guidance and yield curve control (YCC) and...

The Fed's policy rule switches during the different phases of the business cycle. This finding is established using a dynamic mixture model to estimate regime-dependent Taylor-type rules on US quarterly data from 1960 to 2021. Instead of exogenously partitioning the data based on tenures of the...

A BMW model is augmented with a credit market affected by banks' balance sheet and used to assess the dynamic performance of an economy in the face of demand and financial shocks under different assumptions about the interactions between monetary and macroprudential policy. We show that the...

The Term Asset-Backed Securities Loan Facility (TALF), which addressed strains in the asset-backed securities market, was an unusual crisis facility because it provided loans to a wide range of nonbank financial institutions. Using new, detailed loan-level data, we study whether institutional...

This paper analyzes the institutional framework of central banks in ten Central and East European countries using the ECB as benchmark. It looks at the legislated objectives of these central banks, assesses the degree of political and functional independence and the status of their democratic...

Ten years of inflation targeting worldwide provide valuable lessons. Inflation targeters (ITers) have been very successful in meeting their inflation targets (ITs). Industrial output sacrifice during inflation stabilization and industrial output volatility has frequently been lowered after IT...

In this paper selective issues of long-run sustainability of monetary unions are analyzed. Using theoretical insights and the experience of EMU up to now we argue that empirical evidence on OCA criteria for EMU suggests that benefits for the countries participating in EMU outweigh costs by a...

In this paper we analyze equilibrium determinacy in a sticky price model in which the pass-through from policy rates to retail interest rates is sluggish and potentially incomplete. In addition, we empirically characterize and compare the interest rate pass-through process in the euro area and...