Showing 1 - 10 of 55
This essay argues that the Achilles heel of the international monetary and financial system is that it amplifies the “excess financial elasticity” of domestic policy regimes, ie it exacerbates their inability to prevent the build-up of financial imbalances, or outsize financial cycles, that...
Persistent link: https://www.econbiz.de/10011114878
In analysing the performance of the international monetary and financial system (IMFS), too much attention has been paid to the current account and far too little to the capital account. This is true of both formal analytical models and historical narratives. This approach may be reasonable when...
Persistent link: https://www.econbiz.de/10011114883
How should monetary policy be designed when the central bank has private information about future economic conditions? When private news about shocks to future fundamentals is added to an otherwise standard new Keynesian model, social welfare deteriorates by the central bank's reaction to or...
Persistent link: https://www.econbiz.de/10012971225
Do financial frictions call for policy cooperation? This paper investigates the implications of simple financial frictions, monopolistic banking together with staggered loan contracts, for monetary policy in open economies in the linear quadratic (LQ) framework. Welfare analysis shows that...
Persistent link: https://www.econbiz.de/10012971227
Central banks that lack credibility often tie their exchange rate to that of a more credible partner in order to “import” credibility. We show in a small open economy model that a central bank that displays “limited credibility” can deliver significant improvements to a social welfare...
Persistent link: https://www.econbiz.de/10011184274
Using survey data of inflation expectations across a 36 developed and developing countries, this paper examines whether the adoption of inflation targeting has helped to anchor inflation expectations. We examine the response of inflation expectations following a shock to inflation, inflation...
Persistent link: https://www.econbiz.de/10010772603
During a time of rising world interest rates, the central bank of a small open economy may be motivated to increase its own interest rate to keep from suffering a destabilizing outflow of capital and depreciation in the exchange rate. This is especially true for a small open economy with a...
Persistent link: https://www.econbiz.de/10012969917
In this paper we study the drivers of global interest rate. Global interest rate is defined as a principal component for the largest developed and developing economies' discount rates (the US, Japan, China, Euro area and India). A structural global factor-augmented error correction model is...
Persistent link: https://www.econbiz.de/10012971222
This paper evaluates the role of the first arrow of Abenomics in guiding public perceptions on monetary policy stance through the management of expectations. In order to end chronic deflation, a policy regime change must be perceived by economic agents. Analysis using the QUICK survey system...
Persistent link: https://www.econbiz.de/10012971230
Central banks that lack credibility often tie their exchange rate to that of a more credible partner in order to “import” credibility. We show in a small open economy model that a central bank that displays “limited credibility” can deliver significant improvements to a social welfare...
Persistent link: https://www.econbiz.de/10012971241