A number of recent papers have used policy simulations from small empirical macro models to assess the efficacy of inflation-forecast targeting. The macro models used to undertake the simulations differ significantly with the assumed degree of openness, an important factor for the analysis....

As the sub-prime crisis celebrates its first birthday, what lessons have been learnt? The crisis was rooted in a misperception problem among end-investors, facilitated by financial engineers selling “tail risk†products. Contrary to the precrisis rhetoric, this tail risk was often...

Este escrito analiza por qué el tipo de regulación financiera compleja desarrollado en las últimas décadas puede ser una respuesta subóptima a la creciente complejidad del sistema financiero. Los ejemplos de otras disciplinas muestran que la toma de decisiones en un entorno complejo se...

AbstractThe following sections are included:IntroductionComplexity, Comparability, and CredibilityCan Less Be More in Finance?Leverage versus Risk-Based CapitalModelling the Risk of Small Bank DefaultModeling Financial RiskPublic Policy ImplicationsConclusionReferences