China has taken first steps hinting at an internationalization of the Renminbi: The country has begun cautious action for opening up its capital account and allowed currency fluctuations within a certain limit between 2005 and 2008. Promoting Hong Kong as a test center for the Renminbi's...

China has taken first steps hinting at an internationalization of the Renminbi: The country has begun cautious action for opening up its capital account and allowed currency fluctuations within a certain limit between 2005 and 2008. Promoting Hong Kong as a test center for the Renminbi's...

Testing the international Trilemma traditionally relies on discretely classified exchange rate regimes. This simplification limits the implications drawn for middle-ground policies like managed floats or basket pegs, and inhibits inference on the empirical shape of the exchange rate stability --...

This paper shows that the price impact of foreign official (FO) purchases or sales of U.S. Treasuries (USTs) is about twice as large as previously reported in the literature once critical sources of endogeneity are addressed. We also show that prevailing estimates of this price impact suffer...

This paper uses the recent cross-country experience with quantitative tightening (QT) to assess the impact of shrinking central bank balance sheets. We analyze the experience in seven advanced economies (Australia, Canada, Euro area, New Zealand, Sweden, UK and US)--documenting different...

In this paper we first explore the impact of nominal and real persistence on the transmission process of various shocks in an estimated DSGE model of euro area. We then analyse its impact on optimal monetary policy and investigate the performance of various monetary policies when the policy...

In this paper, we discuss the consequences of taking into account the variations of the natural real interest rate (r t *) in simple monetary policy rules. We also provide one possible model-based analysis of the level of r t * that has prevailed in the euro area since the early 1970s, and...

In this paper we estimate simple Taylor rules paying particular attention to interest rate smoothing. Following English, Nelson, and Sack (2002), we employ a model in first differences to gain some insights into the presence and signifcance of the degree of partial adjustment as opposed to a...

In this paper, we analyze optimal monetary policy rules in a model of the euro area, namely the ECB’s Area Wide Model, which embodies a high degree of intrinsic persistence and a limited role for forward-looking expectations. These features allow us, in large measure, to differentiate our...

In monetary policy strategies geared towards maintaining price stability conditional and unconditional forecasts of inflation and output play an important role. This paper illustrates how modern sticky-price dynamic stochastic general equilibrium models, estimated using Bayesian techniques, can...