This paper studies to what extent surprise money growth may affect output, employment,and real wages from the supply side. Under nominal wage contracts, we analyze the effects of monetary shocks in a limited participation model. We observe that unanticipated money growth increases real wages,...

This is the foreword to ‘Macroprudential Policy' (BIS Paper No. 86) which contains papers presented at the joint Central Bank of the Republic of Turkey (CBRT) - Bank for International Settlements (BIS) - International Monetary Fund (IMF) conference on "Macroprudential policy: effectiveness and...

Rapid credit growth, short-term capital inflows, and associated macro-financial risks in the aftermath of the global crisis necessitated the use of alternative policy instruments in Turkey. Accordingly, the Central Bank of the Republic of Turkey (CBRT) has designed and adopted a new policy mix...

We analyze the microfoundations of the Phillips curve, a key relationship in general macroeconomics and models of monetary policy in particular. The form in current widespread use includes both forward looking expected inflation and lagged inflation. The presence of lagged inflation is necessary...

Policymaking at the Bank of England has provided detailed information on both the decisions of individual members of the Monetary Policy Committee. We consider this decision making process in the context of a model in which inflation forecast targeting is used but there is heterogeneity among...

We develop an estimated model of the U.S. economy in which agents form expectations by continually updating their beliefs regarding the behavior of the economy and monetary policy. We explore the effects of policymakers' misperceptions of the natural rate of unemployment during the late 1960s...

We connect two major strands of the recent monetary policy literature, i) the search for well microfounded optimising models consistent with macroeconomic data, especially persistence in inflation, and ii) the wealth of newly available microeconomic data on price changing behaviour from the...

Papers estimating the reaction function of the Bundesbank generally find that ist monetary policy from the 1970s to 1998 can well be captured by a standard Taylor rule according to which the central bank responds to the output gap and to deviations of inflation from target, but not to monetary...

We examine the performance and robustness properties of monetary policy rules in an estimated macroeconomic model in which the economy undergoes structural change and where private agents and the central bank possess imperfect knowledge about the true structure of the economy. Private agents...