We study how financial development is related to short run stabilization. Specifically, our objective is to derive monetary policy efficiency measures (PEMs) for 37 industrialized and developing countries and analyze the impact that the size and depth of the banking sector and the capital sector...

We present an empirical study of voting behavior to analyze the impact of opportunism; that is, whenever political incumbents implement economic policies strategically and in connection with general elections in order to gain votes. We derive a measure for opportunism that is isolated from the...

The purpose of this paper is to determine whether foreign bank presence has had a stabilizing or destabilizing effect on the Latin American banking sector. Our results suggest that, while "brick and mortar" operations of foreign banks in Latin American countries contribute to the reduction of...

We generate a time-series of relative preferences of policy makers for inflation stability using a sample of 24 countries in order to study the behavior of political parties. Such behavior is essential in both the partisan cycle models and the opportunistic political cycle analysis. Our evidence...

We show how a one-period aggregate demand - aggregate supply (AD-AS) model yields equivalent expressions for inflation and output under optimal monetary policy as a forward-looking New Keynesian model. Furthermore, we analyze the advantage the AD-AS model has over the New Keynesian specification...

In this paper we use an equilibrium model to derive the monetary policy maker's optimal response function, taking into account the interaction between individual firms and households and their participation in markets for goods and services. The theoretical formulation is used to set up a social...

This paper proposes a method for measuring the contribution of improved monetary policy to the changes in macroeconomic performance identified with inflation and output stability. Our technique involves estimating actual and optimal policy rules as a function of the aggregate supply and demand...

In this paper, we study whether voters are more likely to "vote out" a corrupt incumbent than to re-elect him. Specifically, we examine whether they retract their support from political candidates who they think are corrupt by looking at changes in an index of corruption perceptions between the...

In this paper I analyze three specifications of spot exchange rate models by using an alternative approach in defining the news variable. In particular, I employ quarterly data of the U.S. dollar/German Mark exchange rate for the period 1991-1998 in order to determine whether the effect of news...

We study how important monetary, exchange-rate, and fiscal arrangements are in determining the relative preferences of policy makers for inflation stability. We argue that focusing on policy intentions, represented by these preferences, constitutes a better way of evaluating policy behavior,...