This paper studies the institutional design of the coordination of macroeconomic stabilization policies within a monetary union in the framework of linear quadratic differential games. A central role in the analysis plays the partitioned game approach of the endogenous coalition formation...

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...