Does global financial integration reduce the independence of monetary policy or its effectiveness? Do flexible exchange rates offer sufficient insulation from foreign monetary and financial developments? To provide an answer to these questions, this paper summarises the outcome of ongoing...

We study the impact of diverse beliefs on conduct of monetary policy. We use a New Keynesian Model solved with a quadratic approximation. Aggregation renders the belief distribution an aggregate state variable. Diverse expectations change standard results about a smooth trade-off between...

In the aftermath of the financial crisis in 2008 and over the course of the European debt crisis, the ECB announced a number of unconventional monetary policy implementations with the aim of restoring confidence in the functioning of the European financial system. This paper studies the effect...

We study the impact of diverse beliefs on conduct of monetary policy. We use a New Keynesian Model solved with a quadratic approximation. Aggregation renders the belief distribution an aggregate state variable. Diverse expectations change standard results about a smooth trade-off between...

Why do markets and central banks systematically hold different beliefs about the path of policy and the economy? I use a simple signal extraction model to contrast predictions based on three mechanisms: asymmetric information, heterogeneous beliefs about the policy rule, and heterogeneous use of...

UK government bond yields rise significantly in a two-day window before Monetary Policy Committee (MPC) meetings, with the majority of this yield drift attributed to increases in risk premia. These effects concentrate in pre-MPC windows that coincide with issuance of UK government bonds....

This paper examines how monetary expansion causes asset bubbles. When there is no monetary expansion, a bubbly asset is not created due to a hold-up problem. Monetary expansion increases buyers' money holdings, and then, dealers are willing to buy a worthless asset from sellers, in hopes of...

This Paper, which extends earlier work by Filardo and Guinigundo (2008) and Nelson (2008), reports on a survey conducted in 2007 on the communication practices of 32 members of the Central Bank Governance Network. The questionnaire sent to Network members was divided into two main parts. The...