This paper investigates the role of observed official inflation-target adjustments in aggregate macroeconomic fluctuations in Indonesia, using an estimated Dynamic Stochastic General Equilibrium (DSGE) model. The paper finds that these adjustments or shocks play a non-trivial role in the...

Using a panel of OECD countries, this study assesses the linkages between structural policies and macroeconomic stability. Business cycle and time-series characteristics of GDP and its components are employed to define various measures for economic instability and for the persistence of adverse...

This paper evaluates from a welfare perspective three policy alternatives for dealing with Dutch disease problems originating from cyclical movements in commodity prices: fiscal rules for government expenditures, capital controls, and taxes on domestic lending. A DSGE model of a small open...

n this paper, I analyze the pros and cons of implementing structural reforms of the labor market in booms vs. recessions, in light of considerations of social efficiency, political viability, and macroeconomic fine tuning. While the optimal timing of a reform depends on the relative importance...

In the study, the relevance of several optimum-currency-area (OCA) criteria is formally worked out in a welfare approach. The optimum monetary-policy rules of the supranational central bank are derived within the Barro-Gordon framework, and consideration is given to how the welfare of the member...

This paper studies a dynamic general equilibrium model with sticky prices and rational expectations in an environment of low interest rates and deflationary pressures. We show that small changes in the public's beliefs about the future inflation target of the government can lead to large swings...

This paper examines the role of a policymaker in macroeconomic outcomes. To determine the possible trade-offs posed by various policy targets, we link a well-known aggregate supply function with a policy rule. In our model we determine the conditions and explore the possibility under which a...

The aim of this paper is to evaluate the controversies of fiscal and monetary policies in defining business cycles in Croatia, i.e. to answer the question whether they can, and in what way, determine the cyclical movements. Using Hodrick-Prescott filter for extracting cycles from selected...

This paper argues that in a homogeneous monetary Real Business Cycle economy where a complete set of nominal contingent claims exist, the requirement to collateralize loans, alone, does not affect the equilibrium allocation when monetary policy is chosen optimally: the Pareto optimal allocation...

Locating the appropriate degree of interaction between fiscal and monetary policy plays an important role in ensuring economic stability. Their joint impact is, however, still unclear. We observe significant differences in the transmission of shocks, in particular between the Great Recession and...