We provide a critical assessment of the method used by the Cleveland Fed to correct expected inflation derived from index-linked bonds for liquidity and inflation risk premia and show how their method can be adapted to account for time-varying inflation risk premia. Furthermore, we show how...

Die neuesten Wirtschaftsdaten und -prognosen deuten auf eine Rückkehr der Rezession hin. Lässt sich das erneute Abgleiten in eine Wirtschafts- und Finanzkrise vermeiden? Sebastian Watzka, Ludwig-Maximilians-Universität München, sieht Möglichkeiten, durch energisches und glaubhaftes Handeln...

We analyze the link between financial development and income inequality for a broad unbalanced dataset of 138 developed and developing countries over the years 1960 to 2008. Using credit-to-GDP as measure of financial development, our results reject theoretical models predicting a negative...

In this note we elaborate on the effect of the modeling choice of the zero lower bound on the size of the fiscal multiplier. To this end we contrast two different ways to implement the ZLB in a New Keynesian model: the ZLB modeled as an endogenous central bank reaction to a contractionary demand...

Households in some European countries increased their indebtedness massively over the past 20 years. Besides household debt, also government debt and corporate debt are in some countries at levels not seen before. While there is a common agreement that these high debt levels are not sustainable...

We derive four sets of counterfactual national interest rate paths for the 17 Euro Area countries for the time period 1999 to 2012. They approximate desirable national interest rates countries would have liked to implement if they could still conduct independent monetary policy. We find that...

Using a time-varying parameter vector autoregression (TVP-VAR) with a new sign restriction framework, we study the changing effectiveness of the Bank of Japan's Quantitative Easing policies over time. We analyse the Zero-Interest Rate Policy from 1999 to 2000, the Quantitative Easing Policy from...