Exploiting the panel VAR GMM estimator's features, macroeconomic country factors are combined with micro-economic bank data to test for the risk taking channel in the Euro Area. According to prior expectations based on an extended DSGE model, the analysis demonstrates that the monetary policy...

This paper analyses whether fiscal policies can alleviate the effects of a global recession that drives interest rates to the zero lower bound. Additionally, we study the benefits of international coordination. The analysis is carried out using a dynamic general equilibrium model of the global...

This paper proposes a new approach to assess the degree of anchoring of inflation expectations. We extend the static setup of the predominant news regressions by introducing exponential smooth transition autoregressive dynamics. Our approach provides estimates of a market-perceived inflation...

We study a simple monetary model in which a central bank faces a boundedly rational private sector and has the goal of stabilizing inflation. The system's dynamics is generated by the interaction of the expectations about inflation of the various agents involved. A modest degree of heterogeneity...

Over the past twenty years, monetary policy rules have played an increasingly central role in disucssions of monetary policy strategy and tactics at the Federal Reserve. This represented a sea change in thinking about monetary policy in terms of a systematic startagey rather than a sequence of...

I analyze monetary policy with interest on reserves and a large balance sheet. I show that conventional theories do not determine inflation in this regime, so I base the analysis on the fiscal theory of the price level. I find that monetary policy can peg the nominal rate, and determine expected...

Contribution to the panel session at the Hoover Institution conference on “Frameworks for Monetary Policy for the Next Century,” May 30, 2014.

This paper draws on several actual policy experiences of the author to demonstrate why it is important to have a rules-based monetary policy. These experiences show that policy rules provide a needed “steady as you go” strategy and serve as an insurance against excessive intervention. They...

Rules-based monetary policy evaluation has long been central to macroeconomics. Using the original Taylor rule, a modified Taylor rule with a higher output gap coefficient, and an estimated Taylor rule, we define rules-based and discretionary eras by smaller and larger policy rule deviations,...

This note discusses Lee Ohanian׳s paper on “Monetary policy in the midst of big shocks”. In particular, it asks what would happen if assumptions are changed so inflation have redistribution effects. Evidence on nominal positions suggests that such effects can be quantitatively important.