Despite the possibility of overbidding, the Eurosystem has con- tinued using the fixed rate tender in its liquidity management. We document this fact for liquidity-absorbing fine-tuning operations, the USD term auc- tion facility, and EUR/CHF foreign exchange swaps. The mechanism is then studied...

En Europe, cinq ans après la récession de 2009, la faiblesse persistante de l’investissement est un sujet majeur de préoccupation. Dans quelle mesure une relance de l’investissement public pourrait-elle contribuer à re-dynamiser l’investissement privé et à faire repartir la...

This article reports on a round table panel discussion entitled « Sovereign Debt Crisis and the Future of the Eurozone », which took place at the 29th International Symposium on Money, Banking and Finance, at the University of Nantes, June 28-29, 2012. The panel was chaired by Andy Mullineux...

This paper derives a central bank’s optimal liquidity supply towards a money market with an unrestricted lending facility. We show that when the effect of liquidity on market rates is not too small, and the monetary authority cares for both interest rates and liquidity conditions, then the...

The fixed rate tender is one of the main procedural formats relied upon by central banks in their implementation of monetary policy. This fact stands in a somewhat puzzling contrast to the prevalent view in the theoretical literature that the procedure, by fixing interest rate and quantity at...

On several occasions during the period 2001-2003, the European Central Bank (ECB) decided to deviate from its “neutral” benchmark allotment rule, with the effect of not alleviating a temporary liquidity shortage in the banking system. This is remarkable because it implied the possibility of...

This paper argues that labor markets across Europe vary dramatically in their fundamentals features and rigidities across Europe. Thus, any discussion of an optimum currency area should focus on the differences and the idiosyncratic changes in the labor markets. After demonstrating the vast...

The assumption of asymmetric and incomplete information in a standard New Keynesian model creates strong incentives for monetary policy transparency. We assume that the central bank has better information about its objectives than the private sector, and that the private sector has better...

The ability of monetary policy to influence the term structure of interest rates and the macroeconomy depends on the extent to which financial market participants prefer to hold bonds of different maturities. We microfound such preferred-habitat demand in a fully-specified dynamic stochastic...