We study monetary policy in a New Keynesian model with a variable credit spread and scope for central bank asset purchases to matter. A novel financial and labor market interaction generates an endogenous cost-push channel in the Phillips curve and a credit wedge in the IS curve. The "divine...

We model pre-euro Spanish monetary policy and use our findings to assess the compatibility of the interest rates set by the ECB since 1999 with Spanish macrofundamentals. We find that in the 1990s Spain implemented successfully a monetary strategy tailored to its own domestic fundamentals; and...

In many recent empirical studies of the Federal Open Market Committee's (FOMC's) interest rate rule, the parameters of the rule are allowed to change over time. However, within this literature, there is no consensus about the nature of the parameter change. Some authors, such as Sims and Zha...

In this paper, I propose an optimal interest rate rule under heterogeneous expectations derived from a welfare criterion that is a second-order approximation of heterogeneous household utility following Di Bartolomeo et al. (2016). Additionally, I explore the agent level of the Branch and...

It is considered inapt for central banks to adjust reserve money (quantity of money) and interest rate (price of money) at the same time. Thus, necessitates the need for a choice instrument. Enough evidence abounds in microeconomic theory on the undesirability of manipulating both price and...

We study how model uncertainty affects the understanding of the interest rate persistence using a generalized Taylor-rule function covering numerous submodels via model average approach. The data-driven weights can be regarded as a measure of power-sharing across monetary policy committee...

After the bankruptcy of Lehman Brothers in September of 2008 and the financial panic that ensued, the Federal Reserve moved rapidly to reduce the federal funds rate to .25%. It was quickly judged that additional measures were needed to stabilize the U.S. economy. Beginning in December 2008, the...

As it can be seen from the literature the affine yield class of the term structure is very important for obtaining the fundamental properties of the zero-coupon bond yield. Therefore any new results about the properties the affine yield class are very desirable. The present paper is devoted to...

In this paper we investigate whether there is a global and dynamic linkage between Monetary and Fiscal Policy in a global framework by using GVAR technique. Our results confirm that there is a significant connection between long-term nominal interest rate and fiscal balance in some industrial...