Some Apparent Puzzles for Contemporary Monetary Policy

Foreign Capital, Inflation, Sterilization, Crowding-Out and Growth: Some Illustrative Models

This paper discusses some puzzles in the contemporary macroeconomic scene in India, from the perspective of public finance and economic development. These include a fiscal deficit higher than it was during the 1991 crisis, but without a large current account deficit or rise in inflation or interest rates, a rising inflow of external capital, accompanied by the RBI’s sterilizing these inflows an...

Do monetary policy shocks matter in the G-7 countries? Using common identifying assumptions about monetary policy across countries

This paper suggests an identified VAR model that identifies monetary policy actions for the G-7 countries without encountering empirical puzzles such as the price puzzle and the liquidity puzzle. Using the model, the effects of monetary policy shocks are examined for the postwar period. Monetary policy shocks have significant effects on output in the short run. However, the contribution of mone...

VAR ’Puzzles’ in Four Big Euro-Zone Countries Under Alternative Estimation Strategies

This paper estimates responses of four European economies to monetary policy shocks in a structural VAR framework. The specification and identification follow and adapt the existing methods of elimination of the ’VAR puzzles’ in open economies. The country VARs are estimated together as a system, with the exchangeable prior that pools some of the information across countries. This approach regu...

A Credit Market Theory of the Money Supply and an Explanation of Two Puzzles in U.S. Monetary Policy

Canadian Monetary Policy Analysis using a Structural VARMA Model

This paper builds a structural VARMA (SVARMA) model for investigating Canadian monetary policy. Despite the support for a VARMA model for monetary policy analysis, the traditional VAR and SVAR models have predominantly been used in the literature mainly due to difficulties associated with the identification and estimation of such a model. Using the scalar component model (SCM) proposed by Athan...