This paper outlines important lessons for monetary policy. In particular, the role of inflation targeting, which was much acclaimed prior to the financial crisis and since then has not lost much of its endorsement, is critically reviewed. Ignoring the relation between monetary policy and asset...

The US Federal Reserve cut interest rates more vigorously in the recent recession than the European Central Bank did. By comparison with the Fed, the ECB followed a more measured course of action. We use an estimated dynamic general equilibrium model with financial frictions to show that...

In this paper I outline - from a practitioner's as well as from a researcher's perspective - several of the key developments that took place during the last century in monetary policy. In particular, I describe how the monetary system evolved from gold standard, prevailing throughout most of the...

Over decades, if not centuries, the reputation of central banks has gone through ups and downs. The Great Moderation marked a period in which inflation came down from rather high levels. Growth and employment were at least satisfying and output variability declined substantially. Was this...

Whilst the debate on the merits of adopting the euro rage on in the UK, comparatively little attention is paid to the way in which the ECB is managing monetary policy in the euro zone. This analysis describes the success of the first five years of the euro's life. Not only has price stability...

In this paper I outline – from a practitioner's as well as from a researcher's perspective – several of the key developments that took place during the last century in monetary policy. In particular, I describe how the monetary system evolved from gold standard, prevailing throughout most of...

We augment a standard monetary DSGE model to include a banking sector and financial markets. We fit the model to Euro Area and US data. We find that agency problems in financial contracts, liquidity constraints facing banks and shocks that alter the perception of market risk and hit financial...

We augment a standard monetary DSGE model to include a banking sector and financial markets. We fit the model to Euro Area and US data. We find that agency problems in financial contracts, liquidity constraints facing banks and shocks that alter the perception of market risk and hit financial...

The focus of the paper is to analyze how the concept behind central bank policy developed over time and how the recent financial crisis and its consequences will have an influence. While the principles of the institutional arrangement for central banks (independence, clear mandate, prohibition...