This paper reviews and analyzes the effects that external (or exogenous) factors, defined as economic factors that cannot be controlled or influenced by the central bank, have on monetary policy and the monetary policy transmission mechanism. Adopting a theoretical research position, we aim at...

In a period in which the functioning of the Euro Zone has generated intense debate, this paper aims at providing a detailed view on one of the main characteristics defining the single currency area: the dichotomy between a unique monetary policy and an almost complete lack of fiscal integration....

Three years have passed since the Bank of Japan's asset purchase program was introduced in 2011, causing a sharp decline in the value of the Japanese Yen. What would be the implications for Japan and Korea's exporters if the weak Yen is here to stay? We explore this question by examining...

This paper examines domestic policy cooperation, a curiously neglected issue. Both international and domestic cooperation were live issues in the 1970s when the IS/LM model predicted very different external outcomes from monetary and fiscal policies. Interest in domestic policy cooperation has...

The Global Integrated Monetary and Fiscal model (GIMF) is a multi-region DSGE model developed by the Economic Modeling Division of the IMF for policy and scenario analysis. This paper compares two versions of GIMF, GIMF with a conventional financial accelerator, where bank balance sheets do not...

In the wake of the global financial crisis and the onset of the Euro zone sovereign debt crisis, existing mechanisms of global economic governance have faced strong theoretical, political, and normative challenges from a wide range of actors operating across multiple spheres in the global...

In price formation it has become customary to consider two main types of price stickiness: by Rotemberg (Rotemberg (1982)) and by Calvo (Calvo (1983)). The nonlinear DSGE models (with different types of stickiness) are estimated for 11 different countries (both developed and emerging markets)....

During the sovereign debt crisis investors rebalanced out of stressed and into non-stressed euro area countries, thereby contributing to the tensions in euro area financial markets. This paper examines the geographical pattern of this great rebalancing. Specifically, we test whether euro area...

The Federal Reserve's muddled mandate to attain simultaneously the incompatible goals of maximum employment and price stability invites short-term-oriented discretionary policymaking inconsistent with the systematic approach needed for monetary policy to contribute best to the economy over time....

Starting from the early 1990s, GDP in Japan stagnated for about a decade while inflation has been persistently low, at times even negative. This paper provides new stylized facts about the Japanese deflationary process and puts these facts into the context of the literature addressing the...