During the Great Recession and its aftermath, the economic performance of Greece and Germany diverged sharply with persistent high unemployment in Greece and low unemployment in Germany. A common explanation for this divergence is the assumption of an unsustainable level of debt in Greece in the...

Use of the New Keynesian model to identify shocks points to contractionary monetary policy as the cause of the Great Recession in the Eurozone.

Many different models of money stock determination exist in the literature. An attempt is made here to understand why the differences in these models arise. Differences in models are ascribed first to the (usually implicit) role assigned to the price level. From this perspective, models fall...

For most of the time since 1995, the Japanese price level has declined. Since early 1999, short-term interest rates have mostly remained near zero. Also, starting in 2001, the excess reserves held by banks have risen dramatically. Many observers have concluded that central banks are powerless to...

The purpose of this paper is to elucidate the way in which current institutional arrangements shape the character of monetary policy. It is emphasized that the Fed, in order to preserve its independence, formulates monetary policy in a way that prevents the formation of coalitions within the...

A requirement for the study of macroeconomic behavior in the early 1980s is an understanding of the monetary policy pursued by the Federal Reserve and of the way this policy was implemented. In an attempt to fulfill this requirement, the formulation and implementation of monetary policy are...