Monetary policy

Refet Gürkaynak, Cédric Tille, 28 April 2017

Are Dynamic Stochastic General Equilibrium (DSGE) models worthwhile? Some economists suggest not, due to their complex nature and disputable assumptions.  This column introduces a new eBook which provides an all-round evaluation of DSGE models, widely used by many central banks, by looking at their current and historical uses as well as their future position in economics.

Thomas Gehrig, Maria Chiara Iannino, 21 April 2017

The first Basel Accord initiated what has become a three decade-long process of regulatory convergence of the international banking system. This column argues that by trying to regulate minimal capital standards, the Basel process itself contributed to an ever-increasing shortfall in aggregate bank capital. Consequently, European banks have become increasingly exposed to systemic risk, suggesting that expansive monetary policy could adversely affect the resiliency of banks. 

Richard Baldwin, Paul Collier, Anthony Venables, 29 March 2017

Regardless of what one may think of the decision, the British people have voted to leave the EU – a result that throws up historic challenges as well as historic opportunities. This column introduces CEPR's latest Policy Insight, which suggests that Brexit should be viewed as an important opportunity for fresh thinking.

Stephen Cecchetti, Kim Schoenholtz, 28 March 2017

US monetary policy has been the target of substantial criticism over the years. This column outlines one key area where the Federal Reserve has done remarkably well – managing price stability.  Its ability to control inflation is a key reason that, for the sake of the US and global economies, the Fed’s independence should be preserved.

Tamim Bayoumi, Barry Eichengreen, 27 March 2017

Asymmetric aggregate supply and demand disturbances across its regions prevent the smooth functioning of a currency union. This column argues that the disturbances in peripheral regions of the US show more symmetry with those in the anchor region than is the case for the Eurozone. Moreover, disturbances to the GIPPS, which previously were in Europe’s periphery, have become more correlated with disturbances to the anchor (Germany) compared to other Eurozone countries. Hysteresis operating via the financial sector may provide an explanation for this development.

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