We examine the behavior of forecasts for real GDP growth using a large panel of individual forecasts from 30 advanced and emerging economies during 1989-2010. Our main findings are as follows. First, our evidence does not support the validity of the sticky information model (Mankiw and Reis,...

Did the increase in counterparty risk perception in the interbank market since autumn 2007 contribute to the severe contraction of the US economy? To address this question we introduce interbank market uncertainty in a DSGE model with frictional financial intermediation. Interbank uncertainty is...

We explore the consequences of losing confidence in the price-stability objective of central banks by quantifying the inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint, we show that an inflation bias as well as a...

We study if central banks can manage market expectations by means of forward guidance in a New Keynesian learning-to-forecast experiment. Subjects observe public inflation projections by the central bank along with the historic development of the economy and subsequently submit their own...

Certainly the current crisis is affecting seriously the convergence process in EU. Starting from the spatial distribution in EU of some fundamental development indicators before the current crisis, we try to estimate the impact of the prolonged crisis. During last years, the less developed...

Active labour market policies (ALMPs), which are primarily addressed to integrate (or reintegrate) into the labour market those who are on the edge of unemployment, are generally analysed in the context of a macroeconomic approach or within a micro-econometric model. A critique of the usual...

This paper focuses on the empirically observed relationship between demographic change and inflation and explores the theoretical nature of the puzzling link between the two. It puts the existent disparate empirical findings in the literature into perspective by formalizing an...

This paper studies the effects of combining financial frictions with wage rigidity in a search and matching framework. The model is able to match three empirical observations that existing search and matching models struggle to explain jointly: the cyclical component of the unemployment rate is...

In the modern economy investmentplays an important role. Investment diversification ensures the development of various markets, including the development of the capital market, which depends on the socio-economic situation of the country and the financial policy. Therefore, it is important to...

We study the loss function of 15 European governments as implied by their budget balance forecasts. Results suggest that the shape of the loss function varies across countries. The loss function becomes more asymmetric as the forecast horizon increases and in advance of parliamentary election....