The unfolding financial turmoil in mature economies has prompted the official and private sectors to reconsider policies, business models and risk management practices. Regardless of its future evolution, it already threatens to become one of the defining economic moments of the 21st century....

We construct a factor model of the yield curve and specify time series processes forthese factors, so that the innovations are mutually orthogonal. At the same time,the factors are constructed in such a way that they assume clear, intuitive interpretations.The resulting “intelligible...

Die Frage nach der Kausalität fällt in die Methodologie. Methodologie ist in denWirtschaftswissenschaften ein Bereich, der sowohl bei Ökonomen als auch bei Philosophenkaum Beachtung findet. ....

The global financial crisis that began in mid-2007 has renewedconcerns about financial instability and focused attention onthe fundamental role of central banks in preventing andmanaging systemic crises. In response to the turmoil, centralbanks have made extensive use of both new and existing...

In this paper, we assess the effects of changes to the primarycredit facility since August 2007 by performing out-of-samplesimulations based on a model developed by Artuç andDemiralp (2008). Our results are highly consistent with thepredictions of our 2008 study—that is, the revised...

[...]This paper addresses how central banks can resuscitatelending chains by providing information that reduces uncertainty about participants along the chains. This action has been taken before: the Bank Holiday of 1933, declared byPresident Franklin Delano Roosevelt, resolved uncertaintyabout...

In this paper we critically review the literature on the political economy of monetary policy, with aneye on the questions raised by the recent financial crisis. We begin with a discussion of rules versusdiscretion. We then examine the issue of Central Banks independence both in normal times and...