We examine optimal and other monetary policies in a linear-quadratic setup with a relatively general form of model uncertainty, so-called Markov jump-linear-quadratic systems extended to include forward-looking variables and unobservable “modes.” The form of model uncertainty our framework encompasses includes: simple i.i.d. model deviations; serially correlated model deviations; estimable regi...

This paperÕs estimates and tests of Fed intervention pro®ts are the ®rst that explicitly adjust for foreign-exchange risk premia; failure to adjust may grossly a€ect estimated pro®ts. Pro®ts appear economically and statistically signi®cant, whether risk premia are modeled as time-constant or as appreciationÕs market beta depending on Fed intervention. The estimates are sensitive to the method o...

Analyzing central bank communication during financial crises, we draw on a surprisingly informative parallel between management of natural disasters such as earthquakes on one hand, and the corresponding communication infrastructure and social interaction during financial turmoil, on the other. The role of social and emotional behavior thereof points to the importance of interpersonal comm...

We present NDEx 2.0, the latest release of the Network Data Exchange (NDEx) online data commons (www.ndexbio.org) and the ways in which it can be used to (i) improve the quality and abundance of biological networks relevant to the cancer research community; (ii) provide a medium for collaboration involving networks; and (iii) facilitate the review and dissemination of networks. We describe inno...

The second round of large-scale asset purchases by the Federal Reserve—frequently referred to as QE2—included repeated purchases of Treasury inflation-protected securities (TIPS). To quantify the effect QE2 had on the functioning of the TIPS market and the related market for inflation swaps, we exploit the measure of combined liquidity premiums in TIPS yields and inflation swap rates derived by...

During fi nancial crises central banks usually decrease interest rates in order to reduce fi nancial uncertainty. This behavior increases infl ation risk. The trade-off between infl ation and uncertainty stabilization can be modeled by the generalized Taylor rule, which describes infl ation sensitivity as a function of fi nancial uncertainty instead of a constant parameter. Based on the GMM-est...

The idea that a common monetary policy in a monetary union imposes costs when compared with independent policies at the country level is largely widespread in the literature. This result leads directly to a greater emphasis on national Þscal policies. We show in this paper that a common monetary policy has more power to asymmetrically affect countries than is usually stated in the literature. A...

Central bank credit has expanded dramatically in some of the euro area member countries since the beginning of the …nancial crisis. This paper makes two contributions to understand this stylized fact. First, we discuss a simple model of monetary policy that includes (i) a credit channel and (ii) a common pool problem in a monetary union. We illustrate that the interaction of the two elements le...

The remarkable stability of low domestic inflation in many countries requires explanation. In this paper, a number of competing hypotheses are evaluated on a stand-alone basis, and all are found to be inadequate. This includes the view that this outcome has been solely the result of more effective disinflationary monetary policies. However, a combination of these hypotheses (including a signifi...

Bank-speci…c determinants of bank failure during the …nancial crisis in Colombia are identi…ed and studied using duration analysis. The process of failure of banks and related …nancial institutions during that period can be explained by di¤erences in …nancial health and prudence across institutions. The capitalization ratio is the most signi…cant indicator explaining bank failure. Increases in ...