Although economic agents in different parts of a country face heterogeneous prices, empirical literature continue to assume homogeneity in the monetary policy-inflation nexus, with dire consequences for optimal monetary policy and welfare. Using wavelet-based quantile regressions, we provide a...

The aim of this study was to examine the effectiveness of monetary and fiscal policies with a view to establishing the existence of fiscal dominance in Kenya. The study employed monthly data for the period Jan 2010 - Dec 2022. Using Structural Vector Autoregressive (SVAR) Model, the study...

This paper examines the potential impact of US monetary policy normalization on portfolio capital flows to Emerging Markets Economies (EME) explicitly taking into account the unconventional US monetary policy. We build an econometric model of the drivers of capital flows to EMEs and the results...

We build a tractable New Keynesian model to study four types of monetary and fiscal policy. We find that quantitative easing (QE), lump-sum fiscal transfers, and government spending have the same effects on the aggregate economy when fiscal policy is fully tax financed. Compared with these three...

In 2019, Sweden's central bank, the Riksbank, sold carbon-heavy bonds from its foreign exchange reserves. This act led to the Riksbank being labelled a frontrunner in what has been referred to as green central banking (GCB). The growing interest in proactive central banking has led to a wealth...

The neutral real rate of interest (r*) is a key variable for assessing the tightness of monetary policy. The neutral real interest rate has by all accounts fallen substantially over the past three decades, amid slowing productivity growth, an ageing population, increased inequality and increased...

Since 2022 the European Central Bank and Danmarks Nationalbank have increased their key monetary policy rates at a record pace. This study shows that the pass-through to retail rates has been stronger in Denmark than in the euro area so far. Interest rate fixation periods are shorter in Denmark,...

By analyzing housing data from the period 1850 to 2019 in Norway, we find evidence of downward nominal house price rigidity. More specifically, we document that there is a marked fraction of repeat-sales housing transactions with a zero nominal price change and show that this fraction increases...

We study how monetary policy should respond to shocks which permanently alter the steady state structure of the economy. In such a case monetary policy affects not only the short run misallocations due to nominal rigidities, but also relative prices which stimulate reallocation of capital. We...