There is a wide consensus that the existence of structural rigidities in the Eurozone reduces the effectiveness of the ECB's monetary policies. In order to test this ?ECB-handicap? hypothesis, we perform a meta-analysis of the effects of monetary policies in the US and the Eurozone countries....

In the standard New Keynesian sticky price model the central bank faces no contradiction between the stabilization of inflation and the stabilization of the welfare relevant output gap after a productivity shock hits the economy. When the standard model is enhanced by real wage rigidities or...

This paper examines the countercyclical policy options available to Latin American countries in the face of the current global economic crisis, concluding that most of the major countries in the region appear to possess the fiscal space (as measured by credible fiscal sustainability and debt...

Die Konjunktur liegt infolge der Finanzmarktkrise auf der Intensivstation. Was ist jetzt die richtige Medizin, in welcher Dosis muss sie verabreicht werden? Die bisher beschlossenen Maßnahmenpakete der Bundesregierung reichen nach Einschätzung des RWI Essen nicht aus. Um eine tiefe und...

Slower growth and higher inflation can worsen poverty. By implication, maintaining macroeconomic stability is necessary to reduce poverty. When a typical aggregate demand (AD) policy for stabilization is not effective, however, its impact on poverty could be devastating as incomes of the poor...

The workhorse DSGE model used for monetary policy evaluation is designed to capture business cycle fluctuations in an optimization-based format. It is commonplace to log-linearize models and express them with variables in deviation-from-steady-state format. Structural parameters are either...

For a time, the Federal Open Market Committee (FOMC) seemed to have learned from the mistakes of the past. Instead of taking good economic performance as a sign of incipient inflation, Chairman Alan Greenspan kept interest rates relatively low in the late 1990s, even as unemployment plummeted....

The most charitable interpretation of the Federal Reserve's recent interest rate hikes is that they appear to have been premature. A convincing array of data on payrolls, employment-to-population ratios, and other labor market indicators show that the current recovery has not yet attained the...

Most recent discussions of deflation seem to overlook the main dangers posed by a deflationary economy and appear to offer superficial solutions. In this brief, the authors argue that, barring drastic changes in asset and output prices, deflation itself is not the main problem, but rather the...

Change was the buzzword of the Obama campaign, in response to a political agenda precipitated by financial turmoil and a global economic crisis. According to Research Associate Thomas Palley, the neoliberal economic policy paradigm underlying that agenda must itself change if there is to be a...