The aim of this paper is to bring together two recent developments in the â€contracting†approach to the time-inconsistency problem of monetary policy: linear contracts under common agency and central bank preference uncertainty under single agency. We show that under common agency and...

This paper focuses on the “contingent†view of transparency. By introducing endogenous fiscal policy and labour market distortions, it studies the effects the uncertainty in central bank’s (CB) preferences on the behaviour of wage and fiscal authorities and thus on output and...

We add some elements of prospect theory to an analytically tractable version of Lucas’s “islands†model and show that the inclusion of reference dependence, declining sensitivity and loss aversion into the agents’ utility function leads to three main results. First, the...

By estimating a Markov-switching model, we provide new evidence on the nonlinear effects of monetary policy shocks on asset prices and on their bubble component. We show that regime-dependence is mainly driven by the states affecting the interest rate equation. We also show that, following a...

We study the effects of COVID-19, and the ensuing lockdown and fiscal policies, on the welfare of different age-groups within a life-cycle macroeconomic scheme, adapted from Gertler (1999), where the pandemic is represented as a shock to the mortality rate. We obtain two main results. First, we...