We study the extent to which the belief-formation process affects the dynamics of macroeconomic variables when the central bank uses forward guidance. Standard sticky-price models imply that far future forward guidance has huge and implausible effects on current outcomes, these effects grow in...

Applying the Bayesian approach, a small open economy DSGE model was estimated using a sample of quarterly data for a macro-region formed by six Central Europe and Baltic economies: Czech Republic, Estonia, Hungary, Lithuania, Poland, and Slovakia. Estimates have been employed to investigate the...

Promises often foster trust and cooperation. A recent literature explores why. Two explanations have been proposed, and experimental tests provided some support and some controversy:- Charness & Dufwenberg (2006) (C&D) propose an expectation-based explanation (EBE). People are guilt averse (GA):...