The recent financial crisis has deeply affected money markets. We analyze the effectiveness of monetary policy in the euro area with respect to (i) how much monetary policy expectations are reflected in money market rates, (ii) how much money market rates were disturbed by liquidity and credit...

This paper investigates the optimal monetary policy response to a shock to collateral when policymakers act under discretion and face model uncertainty. The analysis is based on a New Keynesian model where banks supply loans to transaction constrained consumers. Our results confirm the...

This paper revisits the trade-off between central bank independence and conservatism using a New Keynesian model with uncertainty about the central banker's output gap target. It is shown that when this uncertainty is high, the trade-off no longer holds. In this case, the optimal combination...

In this paper we quantitatively evaluate the hypothesis that the Great Moderation is partly the result of a less activist monetary policy. We simulate a New Keynesian model where the central bank can only observe a noisy estimate of the output gap and find that the less pronounced reaction of...

This paper examines if US monetary policy responds to asset prices. Using real-time data we estimate a Taylor-type rule with an asset price variable. This variable refers to real estate prices, considering that those exhibit an important share in households' asset portfolio. Moreover, especially...

The analysis of this paper examines the uniqueness of equilibria in a broad class of dynamic monetary models that satisfy Lucas's (1972) natural rate hypothesis (NRH). For a given demand specification, the resulting bounds for determinacy on monetary policy's interest rate rule are the same for...