We look for a theoretical justification of nominal wage contracts in household diversification of risk. We assume it is more costly for households than for firms to use financial markets for this purpose. In a calibrated general equilibrium model we find from stochastic simulation that where...

Several methods have been proposed in the last few years for evaluating uncertainty in forecasts produced by nonlinear econometric models. Some methods resort to Monte Carlo, while others resort to different simulation techniques. This work aims at comparing these methods by means of experiments...

We analyze the effectiveness of monetary policy rules in the presence of the zero lower bound on nominal interest rates, using stochastic simulations. Specifically, we assume a small structural model composed of the IS and AS curves with both forward-looking and backward-looking agents, and...

An important question for central banks is how they should report the uncertainty of their forecasts. This paper discusses a way in which a central bank could report the uncertainty of its forecasts in a world in which it used a single macroeconometric model to make its forecasts and guide its...

Purpose The purpose of this paper is to identify, measure and optimise financial risk and its effect on returns from innovation projects on an accrual basis and on a cash basis in a commodity industry. Design/methodology/approach A hypothetical case study, based on a real case, of a...