The economic performances of the Eurozone look weaker than those of the United States over the period 1999-2006, in spite of the fact that the former applies more thoroughly the 'new macroeconomics' governance rules concerning public deficits and inflation control. The literature emphasizes Alan Greenspan's pragmatism when discussing the relative success of the Fed, but the reasons why pragmati...

Disinflationary episodes are a valuable source of information for economic agents trying to learn about the economy. This paper is especially interested in how a policymaker can themselves learn by disinflating. The approach differs from the existing literature, which typically focuses on the learning of private agents during a disinflation. We build a model where both the policymaker and priva...

This paper applies a state-space approach to estimate the implicit inflation target of the South African Reserve Bank (SARB) since the adoption of the Inflation Targeting (IT) framework. The paper‟s findings are two. First, although the official inflation target range is 3–6 percent, in practice, the SARB seems to have aimed for the upper segment of the band (41 2 –6 percent) for most of the p...

We compare optimal and simple interest-rate rules. Our model features optimizing agents, monopolistic competition in both product and labor markets, and one-period nominal contracts (for wages alone or for both wages and prices) signed before shocks are known. Exact solutions ensure that we obtain correct welfare rankings. Optimal rules maximize the unconditional expected utility of the represe...

Purpose: This paper examines the economic effects of the demographic transition in developing countries. Findings: Based on data from the World Bank and using a sample of forty-three developing economies, we find that the growth rate of per capita GDP is linearly dependent upon population growth, both the young and old dependency ratios, the mortality rate, and whether or not the rate of popula...

Several papers have documented a regime switch in US monetary policy from ‘passive’ and destabilizing in the pre-1979 period to ‘active’ and stabilizing afterwards. These studies typically work with DSGE models with rational expectations. This paper relaxes the assumption of rational expectations and allows for learning instead. Economic agents form expectations from simple models and update th...

The purpose of the paper is to study the monetary policy implications of unionized labor markets in a New Keynesian framework. It is shown that, once the presence of large wage setters is taken into account, the degree of wage setting centralization and the aggressiveness of the central bank in stabilizing inflation jointly affect the equilibrium level of real economic activity in the long-run....

Disinflationary episodes are a valuable source of information for economic agents trying to learn about the economy. In this paper we are particularly interested in how policymakers can themselves learn by disinflating. The approach differs from the existing literature, which typically focuses on the learning of private agents during a disinflation. We build a model where both the policymaker a...

We introduce Large Scale Asset Purchases (LSAPs) in a New-Keynesian DSGE model that features distinct mortgage and corporate loan markets. We show that following a significant disruption of financial intermediation, central-bank purchases of mortgage-backed securities (MBS) are uniformly less effective at easing credit market conditions and stabilizing economic activity than outright purchases ...

Article history: Received 8 September 2007 Received in revised form 9 April 2008 Accepted 17 July 2008 Available online 7 August 2008 A random-matching model with a clearinghouse is constructed to investigate the impact of privatemoney on economic efficiency and social welfare in threemonetary regimes. A subset of agents, called bankers, whose credit histories are recorded by the clearinghouse,...