In order to examine the optimum currency area case for EMU, we estimate structural VARs in output, the real exchange rate and prices for 14 EU countries and a small control sample. Using quarterly data since the end of bretton Woods, we find that (1) the data are strongly correlated for the...

Dynamic stochastic general equilibrium (DSGE) models have begun to dominate the field of macroeconomic theory and policy-making. These models describe the evolution of macroeconomic activity as a recursive sequence of outcomes based upon the optimal decision rules of rational households, firms...

Central bank independence is widely thought be a sine qua non of a credible commitment to price stability. The surprise decision by the UK government to grant operational independence to the Bank of England in 1997 affords us a natural experiment with which to gauge the impact on the yield curve...

Dynamic stochastic general equilibrium (DSGE) models have begun to dominate the field of macroeconomic theory and policy-making. These models describe the evolution of macroeconomic activity as a recursive sequence of outcomes based upon the optimal decision rules of rational households, firms...

Following Blinder's (1997) suggestion, we examine the implications for the optimal interest rate rule following the relaxation of the assumption that the policymaker's loss function is quadratic. We investigate deviations from quadratics for both symmetric and asymmetric preferences for a single...

We re-connect money to in.ation using Goodfriend and McCallum's (2007) model where banks supply loans to cash-in-advance constrained consumers on the basis of the value of collateral provided and the monitoring skills of banks. We show that when shocks to monitoring and collateral dominate those...

The authors examine the implications for the optimal interest rate rule that follow from relaxing the assumption that the policy-maker's loss function is quadratic. They investigate deviations from quadratics for both symmetric and asymmetric preferences for a single target and find that (i)...

This paper examines UK business cycle fluctuations in 22 complete cycles since 1871. We catalogue the incidence and typical duration of UK business cycles. The summary statistics of the economy are explored, including the spectral density, sample covariation and cross spectrum of macroeconomic...