Previous attempts at modelling current observed endogenous financial variables in a macroeconomic model have concentrated on only one observed endogenous variable – namely the short-term rate of interest. The solution method for dealing with more than one observed endogenous variable has thus...

The downturn in the world economy following the global banking crisis has left the Chinese economy relatively unscathed. This paper develops a model of the Chinese economy using a DSGE framework with a banking sector to shed light on this episode. It differs from other applications in the use of...

This paper develops a model of the Chinese economy using a DSGE framework that accommodates a banking sector and money. The model is used to shed light on the period of the recent period of financial crisis. It differs from other applications in the use of indirect inference to estimate and test...

Macro models generally assume away heterogeneous welfare in assessing policies. We investigate here within two aggregative models ó one with a representative agent, the other a long-used forecasting model of the UK ó whether allowing for di§erences in welfare functions (speciÖcally between...

The current financial and economic crisis has highlighted the inadequacy of existing institutional and policy arrangements at the EU level. Even before this crisis, the EU economic growth was low, by international standards, revealing deep structural problems across EU countries, especially in...

The paper examines the inflation targeting regime in the context of transition economies. Recent years have witnessed an increasing number of central banks in these countries moving towards the implementation of inflation targeting regimes. However, the success of such a regime depends largely...

A combination of cyclical and structural factors has lead to a situation which could threaten financial stability worldwide. As the current financial turmoil is unfolding it becomes clearer that the effects of the initial sub-prime crisis, which originated in the US, are spreading across other...

The emergence of the financial crisis back in 2007 exposed a series of deficiencies in the way the European mechanisms functioned, highlighting the incomplete policy design of the EMU (Economic and Monetary Union). Thus, it became evident that financial integration, financial stability and...

Public spending devolution in practice is widely seen as more appropriate for addressing varied political aspirations within state boundaries than is tax devolution. A drawback is that devolved public spending may be subject to irresistible upward pressure, as illustrated by 'formula drift' of...