Fabio Ghironi, 07 December 2017

Most macroeconomists have accepted that their tools need to incorporate more real world phenomena, such as financial intermediation and labor market frictions. Fabio Ghironi discusses the need to incorporate more microeconomics to macroeconomics.

Beryl Chang, Fabrizio Ghisellini, 21 May 2017

Behavioural economics has identified phenomena that standard models could not explain. But its critics warn that it is becoming little more than a ‘pile of quirks’. This column argues that the future development of behavioural economics should focus on a streamlining process that will clarify core issues, fill conceptual gaps, and create tractable models. Behavioural models will only become a coherent alternative to homo economicus if this process occurs.

Massimiliano Marcellino, Angela Abbate, 04 February 2017

Exchange rates are important contributors to business cycle fluctuations in open economies. Forecasting exchange rates is not an easy task, however, perhaps due to the instability of their relationship with economic drivers. This column introduces a model that also allows for changing volatility when forecasting exchange rates. Modelling time variation in the cross-rate relationships, and in the volatilities of the shocks hitting the economic system, significantly improves forecasts.