In this paper we set up a small open economy model with financial frictions, following Curdia and Woodford (2010)’s model. Unlike other results in the literature such as Curdia and Woodford (2010), McCulley and Ramin (2008) and Taylor (2008), we find that optimal monetary policy should not...

Using a three-equation New Keynesian model we find that incorporating an escape clause (EC) into Forward Guidance (FG) is welfare improving as it allows the monetary authority to avoid cases in which the cost of reduced flexibility is too high. The EC provides the central bank with another...

The present study puts forward a plan for solving the sovereign debt crisis in the euro area (EA) in line with the interests of the working classes and the social majority. Our main strategy is for the European Central Bank (ECB) to acquire a significant part of the outstanding sovereign debt...

Central bank communication is widely recognised as crucial to the implementation of monetary policy. This communication should enhance a central bank’s management of the inflation expectations of the financial markets as well as the general public – the latter being a part of the central...

Colombia introduced a market-determined Nominal Exchange Rate (NER) with the US Dollar in 1991, after more than 20 years of controlled and multiple exchange rates. The first nine years the NER was set by an exchange rate band system, since 1999 the exchange rate is determined in a dirty float"...

Se extiende el modelo propuesto por Bernanke yMihov (1998) para el caso de una economía parcialmente dolarizada para estimar los efectos de la política monetaria en el Perú entre 1995 y 2009. Los resultados indican que la política monetaria en el Perú, a pesar de ser esta una economía...

Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a...

This paper analyses nowcasting of manetary policy in an uncertain data environment.Nowcasting induces a relative asymmetry-a ratio of asymmetric preference for output nowcasting to the one for inflation in real-time.We propose a nowcasting Taylor rule to eliminate biases in the asymmetric...

Real-time gross settlement (RTGS) systems often incorporate features designed to economise on liquidity. Such 'hybrid features' have the potential to mitigate the systemic impact of operational disruptions of participants. This paper simulates operational disruptions of participants, using data...

The eurozone is in political and economic crisis. This is due to the inadequate design of the institutional structure of the eurozone and to the current poor implementation of macroeconomic policy. In designing the eurozone, well established principles of economics were ignored and major...