Monetary developments of recent decades began with much promise with inflation targeting by independent central banks; the financial crisis of 2007 ushered in a period of great monetary instability. There are lessons for a return to more stability. Central banks need to stabilize money supply...

We add the Bernanke-Gertler-Gilchrist model to a world model consisting of the US, the Eurozone and the Rest of the World in order to explore the causes of the banking crisis. We test the model against linear-detrended data and reestimate it by indirect inference; the resulting model passes the...

We examine whether by adding a credit channel to the standard New Keynesian model we can account better for the behaviour of US macroeconomic data up to and including the banking crisis. We use the method of indirect inference which evaluates statistically how far a model is simulated behaviour...