We propose an alternative way of estimating Taylor reaction functions if the zero-lowerbound on nominal interest rates is binding. This approach relies on tackling the real rather than the nominal interest rate. So if the nominal rate is (close to) zero central banks can influence the inflation...

This paper provides a first preliminary assessment of the recent two 3-year long-term refinancing operations (3Y LTROs) conducted by the ECB by putting them into a broader context. The perspective taken is that prevailing in the first half of the year 2012, directly after the path-breaking ECB...

This paper investigates the relationship between global liquidity and commodity and food prices applying a global cointegrated vector-autoregressive model. We use different measures of global liquidity and various indices of commodity and food prices for the period 1980-2011. Our results support...

This paper gives a detailed explanation of why a central bank without fiscal backing can lose control of inflation. Moreover, it argues that such danger emerged only recently for the ECB due to its increasing quasi-fiscal activities. Finally we argue that it might not generally be a good idea to...

A sequence of crises and emergency interest rate cuts has moved global interest rates towards zero and government debt to historical records. We discuss the available options to exit from unconventional monetary policies and unsustainable government debt. First, we shed light on the probability...

This paper tackles the issue of cross-section dependence for the monetary exchange rate model in the presence of unobserved common factors using panel data from 1973 until 2007 for 19 OECD countries. Applying a principal component analysis we distinguish between common factors and idiosyncratic...

In the debate on global imbalances, the euro area countries did not receive much attention so far. While the current account is on balance for the entire area, divergences between individual member states have increased since the introduction of the common currency. In this paper, the imbalances...

This paper examines the long-run relationship between energy consumption and real GDP, including energy prices, for 25 OECD countries from 1981 to 2007. The distinction between common factors and idiosyncratic components using principal component analysis allows to distinguish between...