The paper analyzes optimal monetary strategy and policy trade-offs in a DSGE model of an open economy with traded and non-traded sectors. We approximate the utility of the repre- sentative consumer to obtain a micro-founded quadratic loss function of the form extensively used for monetary policy...

We characterize the price discovery in three emerging EU stock markets—the Czech Republic, Hungary, and Poland—by employing high-frequency five-minute intraday data on stock market index returns and four classes of EU and U.S. macroeconomic announcements during 2004–2007. We account for...

In this paper we extend the analysis of optimal monetary policy rules in terms of stability of an economy, started by Evans and Honkapohja (2003b), to the case of heterogeneous private agents learning. Following Giannitsarou (2003), we pose the question about the applicability of the...

This paper analyzes the impact of equity market information imperfections on R&D driven growth. The mechanism proposed is built on two premises. First, the R&D-sector relies largely on equity finance, because of its production features. Second, equity can be persistently mispriced. This is due...

This paper studies foreign exchange risk premium using the uncovered interest rate parity framework in a model economy. The analysis is performed using weekly data on foreign and domestic currency deposits in the Armenian banking system. Results of the study indicate that contrary to the...

In this paper we compare the nature and determinants of outflows from unemployment in the case of the Czech and Slovak Republics which in early 1990’s experienced a process close to a controlled experiment. Overall, our study suggests that the exceptionally low unemployment rate in the Czech...

We extend a continuous—time approach to the analysis of escape dynamics in economic models with adaptive learning with constant gain. This approach is based on applying results of continuous—time version of large deviations theory to the diffusion approximation of the original...

This paper builds on Kocenda (2001) and extends it in two ways. First, two new intervals of the proximity parameter epsilon (over which the correlation integral is calculated) are specified. For these epsilon-ranges new critical values for various lengths of the data sets are introduced and...

We investigate whether recently high U.S. house prices are justified by fundamental factors. The standard unit root and cointegration tests with aggregate data indicate that house rent is the only fundamental which has the same order of integration as the price, but these two variables are not...

In this paper, we analyze the following policy dilemma: strategic trade policy versus free trade when the domestic government is bound to intervene only after the domestic firm's strategic variable is chosen. This intervention allows the domestic firm to manipulate the domestic government and...