Large and persistent capital inflows can be a double-edged sword. Accompanying its many attractions is the tendency to display a boom and bust pattern (volatility and reversals) in addition to the possibility of causing rapid exchange rate appreciation, inflation and loss of monetary policy...

This paper highlights some of the theoretical and practical implications for monetary policy and exchange rates that derive specifically from the presence of a global general equilibrium factor embedded in neutral real policy rates in open economies. Using a standard two country DSGE model, we...

Under what conditions can policymakers make demonstrably poor policy choices? By providing a new account of monetary policy management in the Netherlands during the interwar gold standard, we show how policymakers can fail to escape their long-held beliefs and refuse to consider available policy...