This paper investigates the question of whether a transition to a low-inflation environment, induced by a shift in monetary policy, results in a decline in exchange rate pass-through to consumer prices. Our study distinguishes itself from previous empirical work in that we pay particular...

The paper deals with non-linear dynamics of an extended Kaldor model including not only production and capital stock dynamics but also the interest rate and price dynamics with an adaptive expectation of inflation. Presented structure of the model is described by the system of the five...

In this paper we model the contribution of monetary growth shocks to aggregate fluctuations. Our innovation is to combine persistent money growth shocks with taxes on nominal capital gains in a model in which the central bank operates policy using an interest rate rule. All three features are...

Pioneering work of modelling financial anxieties was given by Kimura et al (1999) as psychological change of people due to financial shocks. Since they regressed financial position (easy or tight) by nonstationary interest rate, their results exhibit high peaks not only in financial crisis...

We study the effects of optimized monetary policy in a semi-structural, estimated small open economy in situations where the policymaker has either complete or less than complete confidence in the model being free from misspecification errors. We use the robust control techniques developed by...

An exchange rate model with heterogeneous expectations is developed in which agents are subject to mutual mimetic contagion in their portfolio decisions. Two alternative sources of heterogeneity are tested in order to explain the short-term dynamics of the euro/dollar since January 1999....

The New-Keynesian Phillips curve plays a central role in modern macroeconomic theory. A vast empirical literature has estimated this structural relationship over various postwar full-samples. While it is well know that in a New-Keynesian model a `weak' central bank response to inflation...