there is no agreement among different economic schools about role of monetary policy in stabilization policy. new classic by means of rational expectations show that only unanticipated monetary policy influences upon real variables. how ever new keynsian by means of rational expectations shows that anticipated monetary policy influences real ariables too. the present article investigates above ...

The Economic and Monetary Union (EMU) implies a considerable change in monetary and fiscal policy design in the European Union. With the aid of a two-country version of the Alesina and Tabellini (1987) model, this paper provides a stylized analysis of monetary and fiscal policy interaction in the EMU. It is shown how macroeconomic outcomes are affected by common monetary and fiscal policies, an...

Most analyses of monetary policy delegation schemes typically ignore the behavior of the fiscal policy maker. The paper investigates how monetary price level targeting or monetary nominal income targeting may yield social gain in an economy with government debt and where the fiscal policymaker, acting strategically, may take counter actions. We argue that the choice of fiscal policy instrument ...

A burgeoning part of the monetary policy design literature posits that optimal monetary policy is the solution to a constrained optimization problem where the monetary authority has the discretion to minimize a social welfare function, taking the economy and other policies as given. In their paper “Is Optimal Monetary Policy Always Optimal?” Troy Davig and Refet Gurkaynak (henceforth, DG) argue...

1 Do Þnancial markets price monetary policy uncertainty? Abstract We study the impact of the uncertainty about the type of monetary policy on stock returns. We derive a model where we explicitly link fundamental uncertainty and uncertainty about the type of monetary policy and generate testable implications of their relative impacts on asset prices. We argue that investors' learning about the s...

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...

For a country that chooses not to "permanently" fix its exchange rate through a currency board, or a common currency, or some kind of dollarization, the only alternative monetary policy that can work well in the long run is one based on the trinity of (i) a flexible exchange rate, (ii) an inflation target, and (iii) a monetary policy rule.' While not often put into this threepart format, the de...

The monetary policy in the frame of monetary transaction through stocks market affects the stocks’ price that these prices also affect the economy with impacting consuming and investing expenses. In another word, based on the importance of monetary part in commercial banks, the effect of these policies on bank stocks has a great importance that is studied in his project. For this purpose, the d...

The paper analyzes two questions: (i) the effect of monetary policy shock on business cycle and (ii) the extent to which a shift in a monetary policy affects the dynamics of business cycle. Unlike previous literature, to answer the questions, we measure the cycle movements by calculating an index from a number of aggregate macroeconomic series via a dynamic factor model. We find that monetary p...