We examine whether the robustifying nature of Taylor rule cross-checking under model uncertainty carries over to the case of parameter uncertainty. Adjusting monetary policy based on this kind of cross-checking can improve the outcome for the monetary authority. This, however, crucially depends...

The Taylor rule is a widely used concept in monetary macroeconomics and has been used in various areas either for positive or normative analyses. We examine whether the robustifying nature of Taylor rule cross-checking in the spirit of Risland and Sveen (2011) also carries over to the case of...

We study the equilibrium properties of a business cycle model with financial frictions and price adjustment costs. Capital-constrained entrepreneurs finance risky projects by borrowing from banks. Banks, in turn, make loans using equity and deposits. Because financial contracts are not...

The European Central Bank's balance sheet policies have been criticized as ineffective or even harmful to the economy. This paper aims at gauging the effects on financial markets, the banking sector and lending to non-financial firms. Using a structural vector autoregression analysis, we find...

The German Bundesbank has since the 1970s focussed its monetary policy on controlling the rate of inflation. The price stability-oriented course in monetary policy was enshrined in the Bundesbank Act and in the Treaty on the Functioning of the European Union (TFEU) as part of the third stage of...

In our dynamic stochastic general equilibrium model, capital-constrained entrepreneurs finance risky projects by borrowing from banks. Banks make loans using equity and deposits. Because financial contracts are non-state-contingent, bank balance sheets are exposed to entrepreneurial defaults....