This paper argues that the lack of timely and decisive policy action to correct domestic and external imbalances contributed crucially to the build-up of financial excesses that led to the financial crisis and the Great Recession. We focus on 2002-07 and perform a number of counterfactual...

The economic crisis triggered by the COVID-19 virus is unique in economic history in its mode and rate of occurrence, global coverage, and consequences. The text reveals the mechanisms of the impact of health shock on the economy and the macroeconomic framework of mitigating and exiting the...

This paper offers a Bayesian decision-theoretic approach to policy evaluation in rational expectation models. First, we show how to correctly assess and rank simple policy rules under the welfare loss minimization criterion in the presence of uncertainty about the model’s structural...