Sticking with the status quo was only one option under debate among monetary experts in the lead-up to renewal of the Bank of Canada’s inflation-targeting mandate, which was announced this week. Several other routes were available. Two of them – namely, targeting nominal GDP or targeting...

We compare the behavior of short term interest rates in hard-peg and floating-exchange-rate countries. We use a framework which allows both domestic and foreign factors to play a role in the determination of interest rates and assess them empirically for eight Latin American countries between...

We build a tractable New Keynesian model to study four types of monetary and fiscal policy. We find that quantitative easing (QE), lump-sum fiscal transfers, and government spending have the same effects on the aggregate economy when fiscal policy is fully tax financed. Compared with these three...

The liberalisation of capital flows makes in the Romanian economy vulnerable to the important and presumably unstable capitals.

Following the New Classical Macroeconomics and the New Keynesian Macroeconomics, the independence of central banks significantly increased after 1990, which could preclude the coordination between the fiscal and the monetary policies. The purpose of this paper is to consider the stabilizing...

The Maastricht Treaty provided the blueprint for achieving Economic and Monetary Union (EMU) as a further stage in the process of political and economic integration of the European Union (EU). In order to qualify to participate in EMU, Member States were required to achieve a high degree of...

Since the writing of David Hume, in the eighteenth century, there has been a general agreement amogst economists that an increase in the stock of money leads, initially, to an increase in economic activity. Most writer have attributed the real effects of money, in the short run, to mistaken...

This paper examines how the fixed exchange rate policy followed in Cyprus for more than 40 years helped to deliver price stability amid high growth rates and low unemployment, and contributed to the successful adoption of the euro. The paper identifies some critical elements for the success of...

This paper compares the different dynamics of the simple sum monetary aggregates and the Divisia monetary aggregate indexes over time, over the business cycle, and across high and low inflation and interest rate phases. Although traditional comparisons of the series sometimes suggest that simple...

How does the transmission of monetary policy change when a central bank digital currency (CBDC) is introduced in the economy? Do aspects of CBDC design, such as how substitutable it is with bank deposits and whether it is interest bearing, matter? We study these questions in a general...