the present paper is an attempt to: 1- demonstrate how money is created (by the nature of the system), and to estimate the inflation resulting from monetary factors in both usurious and non-usurious systems. operational aspects of islamic and non-islamic banking systems are compared. 2- introduce a corrective term to be added to the multiplier of the supply of money, in order to prevent the und...

There are long, (and often variable), lags between a change in interest rates and its effect on real output and inflation. Hence policy should be based on forecasts, (King 2000). So the eventual out-turn, e.g. for output and inflation, is a complex combination of the skills of the forecaster, the response of the policy-makers to the forecasts (and to their other, possibly private, sources of in...

This paper describes the chaotic monetary environment of medieval and early modern Europe. The poor quality of the coinage was a result both of problems with the supply of bullion and with deficiencies of monetary policy. The paper examines the supply and demand of bullion and the determinants of bullion flows. It then discusses the economics and politics of debasement. It concludes with a desc...

We test the importance of multivariate information for modelling and forecasting inflation’s conditional mean and variance. In the literature, the existence of inflation’s conditional heteroskedasticity has been debated for years, as it seemed to appear only in some datasets and for some lag lengths. This phenomenon might be due to the fact that inflation depends on a linear combination of econ...

The Series of Economic Policy Papers of the Central Bank of Chile presents views and analyses of the Chilean economy and the conduct of monetary policy prepared by Bank authorities. This series, aimed at the general public, disseminates and discusses topics that are relevant to the goals and operations of the Central Bank. The views expressed in this document are those of the staff team and are...

We examine whether the publication of forecasts concerning the likely future conduct of monetary policy is socially desirable. Introducing a new central bank loss function that accounts for the deviations from announcements, we incorporate forecasts about future inflation and interest rates into a dynamic monetary model. We show that the announcement of future interest rates is always socially ...

In this paper we propose a relatively simple procedure to predict Euro-zone industrial production using mostly data derived from the business surveys of the three major economies within the European Monetary Union (France, Germany, and Italy). The basic idea is that of estimating business cyclical indicators to be used as predictors for the industrial production in France and Germany; as far as...

This paper evaluates the suitability of current DSGE models for monetary policy analysis from a Bayesian perspective, recognizing that these models may be useful even if they are misspecified along some dimensions, using the framework laid out in Faust and Gupta (2009). The paper argues that practical monetary policy analysis deals with determining how intended policy should be revised in light...

The positive response of prices to an increase in interest rates or contractionary monetary policy has been documented by several empirical studies.2 According to monetarist as well as IS-LM models, an increase in interest rates or contractionary monetary policy reduces aggregate demand leading to a decrease in the price level. As a result, this positive response of prices to positive interest ...