In this paper we study and quantify the e¤ects of a disinflationary policy on output and welfare. Our focus is the policy question of the optimal response to low inflation.The analysis takes place in the context of a DSGE model with sticky prices, time varying velocity and imperfect...

The unconditional expectation of social welfare is often used to assess alternative macroeconomic policy rules in applied quantative research. It is shown that it is generally possible to derive a linear-quadratic problem that approximates the exact non-linear porblem where the unconditional...

Many theoretical and empirical researches have been written on the issue of crises often experienced by developing countries since the early 1990s. Moreover, the 2007 crisis started in the US has taken its place as a global crisis in the literature because of the most spreading crisis over the...

The G-20 Data Gaps Initiative (DGI), which aimed at addressing the information needs that were revealed by the 2007/2008 global financial crisis, concluded its first phase and started a second phase (DGI-2) with the endorsement of G-20 Finance Ministers and Central Bank Governors in September...

This paper establishes that one can generally obtain a purely quadratic approximation to the unconditional expectation of social welfare when the steady-state is distorted. A specific example is provided employing a canonical New Keynesian model. Unlike in the non-distorted steady state case,...

We develop a simple and intuitive approach for analytically deriving unconditionally optimal (UO) policies, a topic of enduring interest in optimal monetary policy analysis. The approach can be employed to both general linear-quadratic problems and to the underlying non-linear environments. We...

The unconditional expectation of social welfare is often used to assess alternative macroeconomic policy rules in applied quantitative research. It is shown that it is generally possible to derive a linear-quadratic problem that approximates the exact non-linear problem where the unconditional...

How much do financial sanctions harm the sanctioned economy? We appeal to the case of Russia which provides a valid laboratory to study the effects of sanctions across time because of the three major waves of sanctions being sequentially imposed on the country over the last decade (in 2014,...

In this paper we study the impact of a temporary lack of credibility in a transition to price stability. We quantify the effects of a period of disinflation on temporary output losses, and the impact of the lack of credibility on the optimal speed on disinflation. We demonstrate that the...

We provide a long-run perspective on neutral interest rates with new estimates for 16 advanced economies since the 1870s using the Laubach and Williams approach. Our estimates differ substantially from commonly used proxies. We find that, while cross-country heterogeneity was significant in the...