This paper is concerned with the role of firm heterogeneity under credit constraints for economic growth. We focus on firm size, innovativeness and credit constraints in a semi-endogenous growth model reflecting recent empirical findings on firm heterogeneity. It allows for an explicit solution...

Based on the concept of the monetary conditions index (MCI) to underscore the important role of the interest rates parity, the paper attempts to estimate a model of optimal monetary policy for open emerging market economies. It is designed to shed a light of significance of the internal and...

In the countries of the European economic and monetary union euro banknotes and coins will be put into circulation from January 1, 2002. Seven new banknotes will be issued and eight new coins. Each member country is responsible for the production and distribution of its domestic euro...

This paper uses data on forecasts for unemployment and GDP growth submitted by each individual FOMC member to uncover members' beliefs about Okuns's Law. The results suggest that the perceived relationship between unemployment and real growth weakened significantly since the mid-1990s.

It is common to recognize that ideas, technology and information disseminate across the economy following some kind of diffusion pattern. Typically, the process of adopting a new piece of knowledge will be translated into an s-shaped trajectory for the adoption rate. This type of process of...

Given conflicting results on whether the US monetary policy rule exhibited nonlinearity in the post-war period we employ a new Granger non-causality nonlinearity test and non-parametric procedures to re-examine the issue. Both procedures suggest that the Fed followed a nonlinear Taylor rule with...

We study a production economy with multiple sectors financed by issuing securities to agents who face capital constraints. Binding capital constraints propagate business cycles, and a reduction of the interest rate can increase the required return of high-haircut assets since it can increase the...

Sargent (1999) warns that if policymakers� views on the unemployment - inflation tradeoff are driven by empirical correlations rather than theory, disinflations (escapes from high to low inflation) may periodically occurr but are not bound to last. This paper asks how different inflation...

This paper analyses the monetary transmission mechanism in the euro area through the use of large scale macroeconomic models at the disposal of the European Central Bank and the National Central Banks of the Eurosystem. The results reported are based on a carefully designed common simulation...

This paper estimates a small New-Keynesian model with imperfect information and optimal discretionary policy using data for the euro area. The model is used to assess the usefulness of monetary aggregates and unit labour costs as information variables for monetary policy. The estimates reveal...