Can competition work among privately issued fiat currencies such as Bitcoin or Ethereum? Only sometimes. To show this, we build a model of competition among privately issued fiat currencies. We modify the current workhorse of monetary economics, the Lagos-Wright environment, by including...

This version: March 28, 2016 First version: February 2014 {{p}} Structural DSGE models are used both for analyzing policy and the sources of business cycles. Conclusions based on full structural models are, however, potentially affected by misspecification. A competing method is to use partially...

This paper deals with the phenomenon of high levels of unofficial euroisation in countries preparing for EU membership (Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Serbia and Turkey). The challenges stemming from unofficial euroisation are particularly relevant...

This paper analyzes the use of unconventional policy instruments in New Keynesian setups in which the ‘divine coincidence' breaks down. The paper discusses the role of a second instrument and its coordination with conventional interest rate policy, and presents theoretical results on...

We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation...

This article examines how a rate of the change of the exchange rate as well as how a rate of the change of the expected exchange rate are related to the unanticipated change in domestic money supply and output. Empirical analysis involves quarterly time series of the rupee/US dollar exchange...

This paper compares the monetary policy problem in open economies with that in closed economies. It is found that the monetary policy problems in open and closed economies are isomorphic even in the presence of distortions in a steady state and hence the optimal monetary policies have similar...

International evidence shows the wide economic benefits of inflation targeting, says a ground-breaking C.D. Howe Institute report. In “Mounting Evidence: Findings from Natural Experiments in Inflation Targeting,” author Michael Parkin shows how the evidence broadly supports the merits of...

This paper attempts to define, construct a policy framework, and analyze interactions with monetary policy of macroprudential policy. The available pieces of evidence suggest that the effects of the LTV and DTI regulations for financial stability are rather unclear in Korea.It also shows that...