Scientists and epistemologists agree that a scientific law must be relatively simple and not contradicted by the available evidence. We propose and test one such law pertaining to international economics, the triple-parity law. It integrates three well-known equilibrium conditions, which are...

This paper evaluates empirically the feedback and stance of monetary policy in the United Kingdom under inflation targeting, implemented since October 1992. Its principal contribution is in comparing two subsamples, before the Bank of England was granted operational independence in May 1997 and...

We investigate whether increased independence affects central bank behavior when monetary policy is already in an inflation targeting regime. Taking advantage of the recent UK experience to identify such an exogenous change, we estimate Taylor rules via alternative methods, specifications and...

This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences transmitted by ideology. We introduce inequality-averse and inefficiency-averse agents and analyze their conflict through the interaction between leaders with...

This paper explores the normative aspects of the institution design for macroeconomic policymaking when a society legislates specific objectives and sequencing of decisions for the involved authorities. We develop a general theoretical framework that adds fiscal policy to the...

This paper contributes empirically to the long-debated issue of the legitimacy of the European Central Bank (ECB) with regard to European polities. Using micro-level data from the Eurobarometer survey, we shed light on the socio-demographic determinants of public-opinion support for the ECB. We...

Does theory aid inflation forecasting? To date, the evidence suggests that there is no systematic advantage of theory-based models of inflation dynamics over their astructural counterparts. This study reconsiders the issue by developing a “semi-structural” forecasting procedure comprised of...

We develop a stochastic overlapping-generations model with endogenously evolving heterogeneous beliefs on the degree of inflation protection to be provided by markets versus the monetary authority. It incorporates adaptive learning from inflation history and imperfect empathy in the cultural...