This paper uses a dynamic factor model for the quarterly changes in consumption goods’ prices to separate them into three components: idiosyncratic relative-price changes, aggregate relative-price changes, and changes in the unit of account. The model identifies a measure of “pure”...

It is claimed that membership of the exchange rate mechanism (ERM) of the European Monetary System (EMS) gives countries a credibility bonus which reduces the output and employment costs of disinflation. Within the EMS this arises because of the commitment of participants in the ERM to maintain...

This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy - how policy-maker attitudes on the Phillips curve have evolved since the 1950s - rather...

This paper studies whether the dynamic behaviour of GNP growth, unemployment and inflation is systematically affected by the timing of elections and changes of government. The sample includes the last three decades in 18 OECD economies. We test explicitly the implications of several models of...

This paper considers fiscal and monetary policy in a short-run static macroeconomic model. There are two objectives, control of inflation and control over the growth of national wealth, and a third outcome of importance, a high level of employment. There are two instruments, monetary policy (the...

This paper proposes a conceptual framework to investigate the effects of central bank independence, of the degree of centralization of wage bargaining and of the interaction between those institutional variables, on real wages, unemployment and inflation. The labour market is characterized by...

This paper presents a model of monetary policy-making in a federal monetary union. Central bank council members are representatives from the member states. In a repeated-game context, council members have an incentive to engage in strategic voting, trading political favours between each other....

Bulgaria, like other socialist economies in transition, is attempting to implement an ambitious programme which combines a price reform to reduce price distortions and to liberalize pricing mechanisms, with macroeconomic stabilization to reduce the budget deficit and lower the underlying rate of...

This paper considers the optimal frequency of central bank decision making. This frequency affects the central bank’s flexibility to respond to economic shocks in a timely fashion, and also its credibility to maintain low inflation. Generally, the central bank resets monetary policy less often...

This paper investigates the relation between the dynamics of inflation and exchange-rate regimes. It demonstrates that fixed exchange-rate regimes such as the international gold standard and the Bretton Woods gold-dollar standard appear to be associated with negligible persistence of inflation...