The purpose of this paper is to study the link between an important development in the physical sciences, the discovery of the law of entropy, and its impact on the evolution of heterodox monetary theory early this century. Based on the recognition that, unlike the physical world, the monetary...

The object of this paper is to show that, historically, both economists and policy makers have generally subscribed to variants of what can be generically described as the Wicksllian norm of price level stablization which necessarily assumes a certain degree of endogeneity of the money supply.

This paper proposes and implements a strategy for identifying and estimating the monetary feedback rule used by the Bank of Spain in the period from 1988 to 1996. We present evidence that the estimated feedback rule is plausible and use it to measure the response of the term structure of...

Nous partons de l'idee que la credibilite portant sur les annonces de deficits publics, que nous appelons credibilite budgetaire, est devenue plus importante que la credibilite portant sur les annonces d'inflation, la credibilite monetaire usuelle. Nous construisons un modele theorique pour...

Nous mettons en avant une difficulte supplementaire (par rapport a celles souvent evoquees: chocs asymetriques, absence de coordination des politiques budgetaires...) de l'appartenance a une Union Monetaire: l'heterogeneite des canaux d'action de la politique monetaire sur l'economie. Nous...

L'observation de la politique monetaire menee recemment par la Reserve Federale montre qu'il y a reaction tardive aux evolutions cycliques reelles ou financieres, et pas tentative d'anticipation de ces evolutions. La Reserve Federale se comporte donc comme si elle n'essayait pas d'utiliser les...

This paper examines the evolution of monetary policy in South Africa in 1994-2004 in terms of design, the operational framework, the South African Reserve Bank’s (SARB) understanding of monetary policy transmission and the transparency, credibility and predictability of monetary policy....

Inflation targeting is shown to imply inflation forecast targeting; the central bank’s inflation forecast becomes an explicit intermediate target. Inflation forecast targeting simplifies both implementation and monitoring of monetary policy. The weight on output stabilization determines how...

This paper uses an open economy DSGE model to explore how trade openness affects the transmission of domestic shocks. For some calibrations, closed and open economies appear dramatically different, reminiscent of the implications of Mundell-Fleming style models. However, we argue such stark...

A simple test of inflation target credibility is constructed by subtracting the maximum and minimum inflation rates consistent with the inflation targets from the yields to maturity on nominal bonds. This results in a target-consistent range of real yields on nominal bonds. If expected real...