The EMU assigns a marginal role to economic policy and relies on the idea that, if prices are kept constant, there will be an automatic convergence towards long-run equilibrium income. These beliefs represent the theoretical underpinnings of fiscal and monetary policy strategies in Europe. In...

The pace of economic growth has been frustratingly slow and the recovery has lost momentum in recent months. The economy is weighed down by the ongoing European sovereign debt crisis and fiscal tightening in our own country. In these circumstances, it is essential that the Federal Reserve...

Since the late 1980s the Fed has implemented monetary policy by adjusting its target for the overnight federal funds rate. Money’s role in monetary policy has been tertiary, at best. Indeed, several influential economists have suggested that money is irrelevant for monetary policy. They...

The issue of the current account is important for policy makers, since it provides information about quantity of foreign resources that must be borrowed to fund domestic investment. This study examines the relationship between current account balance as a percentage of GDP and real interest rate...

The design of optimal environmental policy inherits model uncertainty.We investigate the consequences in a simple linear model, where the aim of the policymaker is to stabilise the atmospheric content of carbon. We study how decisionmakers’ concerns about robustness alters policy using the...

Purpose – The purpose of this article is to analyse methods for determination of exchange rates in response to fundamental economic variables and changes in monetary policies. Design/methodology/approach – The paper undertakes empirical examination of exchange rate movements and their...

This essay presents a brief discussion of the foundations and scope of the new Keynesian model for monetary policy. The model is built according to methodology accepted by the scientific community, based on the so-called “microfoundations”; however, as it aims to address monetary policy...

We assess whether the voting records of central bank boards are informative about future monetary policy using data on five inflation targeting countries (the Czech Republic, Hungary, Poland, Sweden and the United Kingdom). We find that in all countries the voting records, namely the difference...