This paper extends and modifies the Keynesian critique of inflation targetingwith reference to stabilisation policy in emerging market economies. The IMF‘basic monetary programming framework’ for developing countries usesgovernment borrowing and the exchange rate as policy instruments in...

The paper presents a monetary policy model with an endogenous capital stock when a backwardlooking element in wage setting causes inflation persistence. We analyse how the endogeneityof the capital stock changes the macroeconomic dynamics with which policy interacts and itsimplications for...

This paper provides a simple weekly model of the regular supply of liquidity in the euro area, with a view to understanding the functioning of the euro area money market. The main result of the analysis is that liquidity has normally been provided by the ECB in a neutral and smooth manner, but...

This paper examines monetary policy in a currency union whose member countries exhibitheterogeneous rates of limited asset markets participation (LAMP). As a result risksharing among member countries is imperfect and the monetary transmission mechanismcan dier across countries. In the limit the...

Time consistency problems can arise when environmental taxes are employedto encourage firms to take irreversible abatement decisions. Setting a high carbontax, for instance, would induce firms to invest in low-carbon technology,yet once investment has occurred the government can then reduce the...

Much recent research has focused on the development and analysis of extensions of the New Keynesianframework that model labor market frictions and unemployment explicitly. The present paper describessome of the essential ingredients and properties of those models, and their implications for...

In this paper we critically review the literature on the political economy of monetary policy, with aneye on the questions raised by the recent financial crisis. We begin with a discussion of rules versusdiscretion. We then examine the issue of Central Banks independence both in normal times and...

We study how the structure of housing finance affects the transmission of monetarypolicy shocks. We document three main facts: first, the features of residentialmortgage markets differ markedly across industrialized countries; second, and accordingto a wide range of indicators, the transmission...