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Byline: Carlo Monticelli (1) Keywords: European Central Bank; asymmetry; optimal monetary policy Abstract: Although the existence of differences in economic structure across European countries is well known, their implications for the conduct of the single monetary policy in Stage Three of EMU have not yet been analyzed. This paper explores the issue on the basis of a two-country, rational-expectations, stochastic model characterized by asymmetric structural equations and a general formulation for monetary policy. Only if financial shocks are the main source of instability can heterogeneity in structures be neglected. When real shocks to aggregate demand prevail, their geographical distribution and the difference in the elasticity of aggregate supply are the key factors governing the response to structural differences. When supply shocks predominate, irrespective of their geographical distribution monetary policy should lean against the wind with more determination than if countries were identical. Differences in the transmission lag of monetary policy or some concern for growth when pursuing price stabilization reduce the size of the correction in monetary policy called for by structural asymmetries. Author Affiliation: (1) Global Markets Research, Deutsche Bank, 1 Great Winchester Street, London, EC2N 2DB, UK Article History: Registration Date: 09/10/2004

Abstract Over the last few years, central banks in industrial countries have undertaken a variety of policies that deviated from ordinary monetary policy. Why were these policies used? Did they [...]

Abstract After the recent economic turmoil, besides the severe recession that hit most European Union (EU) countries, and the resulting downward trend in inflation, foreign direct investment (FDI) levels in [...]

Abstract Francesco Forte dedicated three books to the figure of Luigi Einaudi. The first was published in 1982, the second in 2009, and the third in 2016. Through these books [...]

The introduction of the Euro in 1999 implied the transfer of the responsibility for monetary policy to the European Central Bank and it eliminated the member countries' nominal exchange rates. The smooth operation of a common currency area requires that independent exchange rates are replaced by other adjustment mechanisms. In the Euro area, wages have not been flexible enough, labor mobility is low, no sufficient central fiscal institutions exist, and the fiscal mles have been weak. This led to large external imbalances and high public debt in some countries. Since the outbreak of the economic crisis, macroeconomic reforms resulted in improved international competitiveness and lower public deficits. Several new institutions have been created on the European level, strengthening mutual economic surveillance and cooperation. Keywords Euro area * Macroeconomic adjustment ? International competitiveness * Fiscal federalism * Banking union JEL Classification E62 * G20 * H62, Introduction With the introduction of the Euro, the exchange rate risk among the member states was eliminated. Financial market participants evidently misperceived the sovereign risks, since the interest rate differential [...]

A large number of recent papers have endeavored to estimate the current level and trend in the equilibrium real interest rate. A common finding in these studies is that the [...]

Abstract We investigate the hypothesis that zero lower bound monetary policy has an effect on the correlations of financial assets. Using an event-study approach, we evaluate the impact of the [...]

Abstract Virtual currencies are in vogue mainly due to two factors. First, as a protest against authority-driven monetary policy decisions and second, as alternatives to deficits in some monetary systems [...]

The advanced economies--financial crisis that began in 2007 was triggered by factors that could not have been easily foreseen but also by factors that had been familiar since the Great [...]

This paper analyzes the setting of labor market reforms in the European Monetary Union (EMU), as a political compromise pressured by the lobbying of business interests and trade unions. Using a common agency model of lobbying, we model the impact of distorted and non-distorted Central Bank monetary policy on EMU member state incentives to reform its labor market. Paradoxically, a majority of citizens who do not support the reform can lead to an optimal level of reform. We also show that, in a context of EMU enlargement, inflationary policy generates a status quo if there is a majority of non-supporters. Surprisingly, inflationary policy enhances the reform if the share of non-supporters over supporters increases, and weakens it if this share decreases. Keywords European Monetary Union * Lobbying * Commonagency * Monetary policy * Structural reforms JEL Classification 072 * E52 * E58, Introduction The transition from plan to market in which countries of Central and Eastern Europe (CEE) as well as of Central Asia (transition economies, TEs) embarked in the late 1980s [...]

This paper assesses the relative effectiveness of central bank independence vs. policy rules Pr the policy instruments in bringing about good economic performance. It examines historical changes in (1) macroeconomic [...]

After 19 years in a major commercial bank, complete with mergers and restructuring, the move to a much smaller financial services company was a culture shock--in a good way. This [...]

Abstract It is essential for central banks to assess whether or not the pass-through from monetary policy rates to credit and deposit interest rates is complete in order to ensure [...]

Abstract The paper analyzes the effects of different reactions of fiscal (and to some extent monetary) policies to the Great Recession in Slovenia. We use the model SLOPOL8.1, an econometric [...]

There are a number of misconceptions about the ongoing Eurozone crisis. One is that it is a debt crisis: in fact many countries that are considered to be reasonably sound [...]

Byline: Dominick Salvatore (1) Keywords: central bank independence; early-warning system; euro; European Central Bank; European Monetary System; European Monetary Union; exchange rate arrangements; exchange rate mechanism; global financial integration; International Monetary Fund; international monetary system; international policy coordination; optimum currency area; target zones Abstract: The paper deals with a broad range of topics under the rubric of the international monetary system: exchange rate agreements, International Monetary Fund structure, history and functioning of the European Monetary Union, monetary and fiscal policies adopted in recent years by different countries, with a special emphasis on central bank independence and inflation control, capital flows and cross-border assets growth and their influence on financial stability, and policy proposals to enhance financial stability. With more than four-fifths of world trade conducted under managed or full flexibility the present system can be regarded more as a flexible than a fixed exchange rate regime. EMU is a major institutional innovation while its economic benefits have been amply discussed and perhaps exaggerated, the economic costs seem to have been underestimated. Financial liberalization has resulted in huge benefits to savers and borrowers as capital has tended to flow to its most productive uses around the world, but it has also led to fears that this has sharply reduced the effectiveness of monetary policy. This liberalization imposes a constraint on monetary policy in the sense that it forces a much higher degree of economic convergence than was true before. Author Affiliation: (1) Department of Economics, Fordham University, New York, 10458, USA Article History: Registration Date: 08/10/2004

The European single currency, the euro, has become a visible and successful token of Europeans' drive towards unification. It was born in an era in which high-speed structural change tests [...]

Abstract New ideas on the role of central banks have been exposed in recent years. This paper studies the evolution of the consumer price index and the treasury bill rate [...]

Byline: Rasmus Fatum (1), Michael M. Hutchison (2) Keywords: foreign exchange market intervention; Euro; central bank intervention Abstract: Using a unique intervention 'news' data set, this paper investigates the impact of ECB intervention and intervention-related news (newswire reports) on the Euro exchange rate. A time-series study of news generated by ECB officials and market participants regarding intervention and the value of the Euro as well as an event study of firm reports of ECB intervention is conducted. Both studies find significant short-run effects on the Euro value, while only 'negative' statements (official statements denying past intervention or ruling out future intervention) appear to have persistent effects. Author Affiliation: (1) Department of Marketing, Business Economics and Law, University of Alberta School of Business, Edmonton, Alberta, Canada, T6G 2R6 (2) Department of Economics, Social Sciences 1, University of California, Santa Cruz, CA, 95064, USA Article History: Registration Date: 04/10/2004

JEL Codes E31 * D84, Quantifying individual expectations has become a very important topic in economics, both for academic researchers and policymakers. One of the most relevant advantages of collecting probabilistic expectations is that the [...]

The primary objective and unambiguous mandate of the European Central Bank (ECB) is price stability in the euro area. The ECB's objective is to provide a stable environment that is [...]

This paper studies the effects of financial development, economic growth, and climate-related financial policies on carbon emissions for G20 countries. The focus is particularly on financial policies implemented to scale up green finance and address climate-related financial risks from 2000 to 2017 and represent this paper's value added. The empirical results obtained by relying on the panel quantile regression approach indicate that the impacts of the different explanatory variables on carbon emission are heterogeneous. Specifically, the effect of the stock of short-term financial policies on carbon emissions is negative, and its effect becomes smaller at higher quantiles. The stock of long-term policies also shows significant negative coefficients, but its impact is stronger for higher quantiles. No significance is reported for the lowest quantile. Financial development contributes to improving environmental quality, and its impact is larger in higher emission countries. Energy consumption increases carbon emissions, with the strongest effects occurring at higher quantiles. Our results also support the validity of the EKC relationship and positive effects of GDP and population on high carbon emissions levels. Estimation results are robust to alternative model specifications and after controlling for the role played by adopting international climate change mitigation policies as proxied by the adoption of the Kyoto Protocol., (© 2021. The Author(s).)