When inflation is below its target conventional central banking practice is to decrease the nominal interest rate. The reasoning behind this practice is that reducing interest rates increases spending, heats up the economy and increases inflation. However, this conventional wisdom has recently...

Helicopter money has long been a thought experiment, impossible to implement in the real world. Today, digital technologies make it a realistic option for central banks. We study the effectiveness of helicopter money through the issuance of central bank digital currencies (CBDC) by means of a...

When inflation picks up, central banks are most concerned that the de-anchoring of inflation expectations and the ignition of wage-price spirals will trigger inflation dynamic instability. However, such scenarios do not materialize in the standard New Keynesian theoretical framework for monetary...

This paper puts forward a proposal to complete the ECB Transmission Protection Mechanism (TPI) with the aim of making it more effective in anchoring the yields of European sovereign debts to Member States’ fundamentals. We use a model in which yields fluctuate within bands, which we specify...

Helicopter money has long been a thought experiment, impossible to implement in the real world. Today, digital technologies make it a realistic option for central banks. We study the effectiveness of helicopter money through the issuance of central bank digital currencies (CBDC) by means of a...