Combining, as it does, three fundamental propositions ( uncovered interest rate parity, relative PPP, international equalization of the real return on capital), the double equality is found to hold in the long run with a striking degree of precision and reability when tested by means of a sample...

This paper presents a general equilibrium currency crisis model of the 'third generation', in which the possibility of currency crises is driven by the interplay between private firms' credit-constraints and nominal price rigidities. Despite our emphasis on microfoundations, the model remains...

On January 1st, 1999, the European Central Bank (ECB) has started operating a common monetary policy on behalf of the 11 founding members of the European Monetary Union (EMU). There is a legitimate concern about the practicalities and the effectiveness of the decision-making process inside the...

This paper attempts to measure the reaction of monetary policy to the stock market. We apply the procedure of Rigobon and Sack (2003) to identify and estimate a VAR in the presence of heteroskedasticity. This procedure fully takes into account the endogeneity of interest rates and stock returns...

The paper is organised around three objectives. First, it scrutinises closely each of the two indices of Central Bank Independence (CBI) most commonly used in the empirical literature and quantifies their "subjectivity" bias. It defines and discovers an impressive interpretation bias, a major...