nep-eec New Economics Papers
on European Economics
Issue of 2011‒04‒30
seventeen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The effectiveness of monetary policy in steering money market rates during the recent financial crisis By Puriya Abbassi; Tobias Linzert
  2. Current account imbalances in the euro area: Catching up or competitiveness? By Belke, Ansgar; Dreger, Christian
  3. Money Market Integration and Sovereign CDS Spreads Dynamics in the New EU States By Peter Chobanov; Amine Lahiani; Nikolay Nenovsky
  4. Bilateral Exports from Euro Zone Countries to the US - Does Exchange Rate Variability Play a Role? By Florian Verheyen
  5. Bank Finance Versus Bond Finance By Fiorella De Fiore; Harald Uhlig
  6. From the financial crisis to the economic crisis The impact of the financial trouble of 2007-2008 on the growth of seven advanced countries By J.-C. BRICONGNE; J.-M. FOURNIER; V. LAPÈGUE; O. MONSO
  7. "Hegemonic Currencies during the Crisis: The Dollar versus the Euro in a Cartalist Perspective" By David Fields; Matías Vernengo
  8. Fiscal data revisions in Europe By Francisco de Castro; Javier J. Pérez; Marta Rodríguez Vives
  9. Volatility, money market rates, and the transmission of monetary policy By Seth B. Carpenter; Selva Demiralp
  10. Public Investment and Fiscal Performance in New EU Member States By Jan Hanousek; Evzen Kocenda
  11. EU Enlargement and Monetary Regimes from the Insurance Model Perspectives By Nikolay Nenovsky
  12. Are we able to capture the EU debt crisis? Evidence from PIIGGS countries in panel unit root framework By Baumöhl, Eduard; Výrost, Tomáš; Lyócsa, Štefan
  13. SOE PL 2009 - An Estimated Dynamic Stochastic General Equilibrium Model for Policy Analysis And Forecasting By Grzegorz Grabek; Bohdan Klos; Grzegorz Koloch
  14. Global rebalancing: the macroeconomic impact on the United Kingdom By Haberis, Alex; Markovic, Bojan; Mayhew, Karen; Zabczyk, Pawel
  15. The 'European social model' under pressure By Heise, Arne; Lierse, Hanna
  16. French and American labour markets in response to cyclical shocks between 1986 and 2007: a DSGE approach By T. LE BARBANCHON; B. OURLIAC; O. SIMON
  17. Is Monetary Policy in New Members States Asymmetric? By Borek Vasicek

  1. By: Puriya Abbassi (Gutenberg-Universität Mainz, Saarstrasse 21, D-55128 Mainz, Germany.); Tobias Linzert (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
    Abstract: The recent financial crisis deeply affected the money market yield curve and thus, potentially, the proper functioning of the interest rate channel of monetary policy transmission. Therefore, we analyze the effectiveness of monetary policy in steering euro area money market rates using two measures: first, the predictability of money market rates on the basis of monetary policy expectations, and second the impact of extraordinary central bank measures on money market rates. We find that market expectations about monetary policy are less relevant for money market rates up to 12 months after August 2007 compared to the pre-crisis period. At the same time, our results indicate that the ECB’s net increase in outstanding open market operations as of October 2008 accounts for at least a 100 basis point decline in Euribor rates. These findings show that central banks have effective tools at hand to conduct monetary policy in times of crises. JEL Classification: E43, E52, E58.
    Keywords: Monetary transmission mechanism, Financial Crisis, Monetary policy implementation, European Central Bank, Money market.
    Date: 2011–04
  2. By: Belke, Ansgar; Dreger, Christian
    Abstract: In the debate on global imbalances, the euro area countries did not receive much attention so far. While the current account is on balance for the entire area, divergences between individual member states have increased since the introduction of the common currency. In this paper, the imbalances are traced to catching up and competitiveness factors using paneleconometric techniques. In line with the intertemporal approach to the current account, low income countries tend to run deficits, while rich countries realize surpluses. However, the effect diminishes, if early years are dropped from the sample. The competitiveness channel is more robust and shows the expected sign, i.e. a real appreciation leads to external deficits. To restore competitiveness, a reduction of unit labour costs is on the agenda. Since a deterioration of competitiveness is not a feasible strategy for the surplus countries, an asymmetric response across countries is required in order to reduce the imbalances. --
    Keywords: current account imbalances,catching up and competitiveness,euro area
    JEL: E44 F34 F36
    Date: 2011
  3. By: Peter Chobanov; Amine Lahiani; Nikolay Nenovsky
    Abstract: When the first phase of the crisis focused primarily on the interbank market volatility, the second phase spread on the instability of public finance. Although the overall stance of public finances of the new members is better than the old member countries, the differences within the new group are significant (from the performer Estonia to the laggard Hungary). Sovereign CDS spreads have become major variables focused on risks and expectations about the fiscal situation of different countries. In the paper we investigate, first, whether there is a link in the new member states (NMS) between the expectations about the condition of their public finances and the dynamics of money markets,including integration of national money markets with the euro area.....Our study confirm that the strong link between monetary and public finance risk as apart of total systemic risk increase during the crisis especially for currency boards regimes, when the link becomes stronger and pronounced. For the inflation targeting countries the link became weaker and less pronounced.
    Keywords: money markets, sovereign CDS spreads, EU enlargement, monetary regimes, financial crisis
    JEL: E43 G10 P20 F31 F34
    Date: 2010–10–01
  4. By: Florian Verheyen
    Abstract: The financial crisis and the debt crisis in Europe lead to pronounced swings of the $/€-exchange rate. The influence of this exchange rate uncertainty on exports is neither theoretically nor empirically unambiguous. Therefore, this investigation tries to find out what effect exchange rate volatility has got on exports from eleven euro zone countries to the US. Our results suggest that if exchange rate volatility exerts a significant influence on exports, it is typically negative. Furthermore, exports of SITC categories 6 and 7 seem to be affected negatively most often.
    Keywords: bilateral exports, euro zone countries, exchange rate variability, ARDL bounds testing approach
    JEL: C22 F14 F49
    Date: 2011–04–12
  5. By: Fiorella De Fiore; Harald Uhlig
    Abstract: We present a dynamic general equilibrium model with agency costs where: i) firms are heterogeneous in the risk of default; ii) they can choose to raise finance through bank loans or corporate bonds; and iii) banks are more efficient than the market in resolving informational problems. The model is used to analyze some major long-run differences in corporate finance between the US and the euro area. We suggest an explanation of those differences based on information availability. Our model replicates the data when the euro area is characterized by limited availability of public information about corporate credit risk relative to the US, and when european firms value more than US firms the flexibility and information acquisition role provided by banks.
    JEL: C68 E20 E44
    Date: 2011–04
  6. By: J.-C. BRICONGNE (Banque de France et Université Paris I); J.-M. FOURNIER (Crest-Insee); V. LAPÈGUE (Insee); O. MONSO (Insee)
    Abstract: The financial crisis started in the United States in 2007 on the subprime mortgage market and, then, gradually spread to all financial markets and strongly impacted growth in the main advanced countries through the years 2008 and 2009. Given its scope and its subsequent uncertainty, we discuss the capacity of macroeconometric models estimated on the past to quantify its various transmission channels. We try to measure the total impact of the crisis on the economy of seven advanced countries and on the euro area as a whole using the macroeconomic multinational model NiGEM. During the years 2008 and 2009, Germany suffered from a particularly strong drop in world trade, which would explain more than a half of the effect of the crisis measured in this way in 2009. The United Kingdom and the United States may especially have been affected by wealth effects and a strong drop in their inner demand. This drop may partly have been due to credit tightening. Japan seems to be the most affected country in 2009: the drop in foreign trade was exacerbated by the appreciation of the yen and investment seems to have strongly over-reacted to the fall in activity. A contrario, the fact that France suffered from a less marked drop in output in 2009 might be explained by an absence of over-reaction in economic behaviours and less sensitivity to the fall in world trade.
    Keywords: financial crisis, simulation, macroeconometric model, macro-financial linkages
    JEL: E17
    Date: 2011
  7. By: David Fields; Matías Vernengo
    Abstract: This paper suggests that the dollar is not threatened as the hegemonic international currency, and that most analysts are incapable of understanding the resilience of the dollar, not only because they ignore the theories of monetary hegemonic stability or what, more recently, has been termed the geography of money; but also as a result of an incomplete understanding of what a monetary hegemon does. The hegemon is not required to maintain credible macroeconomic policies (i.e., fiscally contractionary policies to maintain the value of the currency), but rather to provide an asset free of the risk of default. It is argued that the current crisis in Europe illustrates why the euro is not a real contender for hegemony in the near future.
    Keywords: Dollar; Euro; International Currency
    JEL: F31 F33
    Date: 2011–04
  8. By: Francisco de Castro (Banco de España); Javier J. Pérez (Banco de España); Marta Rodríguez Vives (European Central Bank)
    Abstract: Public deficit figures are subject to revisions, as most macroeconomic aggregates are. Nevertheless, in the case of Europe, the latter could be particularly worrisome given the role of fiscal data in the functioning of EU’s multilateral surveillance rules. Adherence to such rules is judged upon initial releases of data, in the framework of the so-called Excessive Deficit Procedure (EDP) Notifications. In addition, the lack of reliability of fiscal data may hinder the credibility of fiscal consolidation plans. In this paper we document the empirical properties of revisions to annual government deficit figures in Europe by exploiting the information contained in a pool of real-time vintages of data pertaining to fifteen EU countries over the period 1995-2008. We build up such real-time dataset from official publications. Our main findings are as follows: (i) preliminary deficit data releases are biased and non-efficient predictors of subsequent releases, with later vintages of data tending to show larger deficits on average; (ii) such systematic bias in deficit revisions is a general feature of the sample, and cannot solely be attributed to the behaviour of a small number of countries, even though the Greek case is clearly an outlier; (iii) Methodological improvements and clarifications stemming from Eurostat’s decisions that may lead to data revisions explain a significant share of the bias, providing some evidence of window dressing on the side of individual countries; (iv) expected real GDP growth, political cycles and the strength of fiscal rules also contribute to explain revision patterns; (v) nevertheless, if the systematic bias is excluded, revisions can be considered rational after two years.
    Keywords: data revisions, real-time data, news and noise, fiscal statistics, rationality
    JEL: E01 E21 E24 E31 E5 H60
    Date: 2011–04
  9. By: Seth B. Carpenter; Selva Demiralp
    Abstract: Central banks typically control an overnight interest rate as their policy tool, and the transmission of monetary policy happens through the relationship of this overnight rate to the rest of the yield curve. The expectations hypothesis, that longer-term rates should equal expected future short-term rates plus a term premium, provides the typical framework for understanding this relationship. We explore the effect of volatility in the federal funds market on the expectations hypothesis in money markets. We present two major results. First, the expectations hypothesis is likely to be rejected in money markets if the realized federal funds rate is studied instead of an appropriate measure of the expected federal funds rate. Second, we find that lower volatility in the bank funding markets market, all else equal, leads to a lower term premium and thus longer-term rates for a given setting of the overnight rate. The results appear to hold for the US as well as the Euro Area and the UK. The results have implications for the design of operational frameworks for the implementation of monetary policy and for the interpretation of the changes in the Libor-OIS spread during the financial crisis. We also demonstrate that the expectations hypothesis is more likely to hold the more closely linked the short- and long-term interest rates are.
    Date: 2011
  10. By: Jan Hanousek; Evzen Kocenda
    Abstract: In this paper we analyze the dynamics of public investment and public finance in new members of the European Union, and also how these sectors were affected by changes in economic freedom and corruption. When we assess the role of regulation and corruption on public investment, we find that improvements in economic freedom tend to be associated with decreases in public investment, while reductions in corruption produce effects going in both directions. Similarly, we show that increases in public investment are often linked with decreases as well as increases in corruption. In terms of public finance we detect mostly improvement in debt when there is less economic regulation, while results for a deficit are less conclusive. On the other hand, improvements in the corruption environment are mostly associated with decreases in the deficit as well as debt. As a general rule that follows from our results, steps aimed at reducing corruption and the degree of economic regulation should lead towards improvements in the fiscal position in most of the new EU countries.
    Keywords: public finance, public investment, economic freedom, corruption, EU convergence and integration, macroeconomic policy, fiscal reforms, new EU members
    JEL: E61 E62 F42 H50 H60 O11
    Date: 2010–12–01
  11. By: Nikolay Nenovsky
    Abstract: Some ten years ago, Michael Dooley (Dooley, 1997; Dooley, 2000) put forward an insurance model of currency crises, which after some modifications gives a good theoretical basis for explanation of the overall dynamics of the post communist transformation and diversity across countries and periods. The article analyses, within the framework of the insurance model, the role of monetary regimes (currency anchor) and EU enlargement (political and geostrategic anchor) and their relationships. The insurance game model not only contains an explanatory power, but it also has the potential to suggest a range of measures that could be useful in overcoming the "bad" dynamics, which we are witnessing today not only in the new member-states, but also EU-wide.
    Keywords: post communist transformation, monetary regimes, insurance model of currency crisis
    JEL: F33 F36 P20 P30
    Date: 2010–06–01
  12. By: Baumöhl, Eduard; Výrost, Tomáš; Lyócsa, Štefan
    Abstract: We assess the issue of fiscal sustainability in the selected EU countries. Our sample includes those showing the highest government debts, which are nowadays known under the somewhat degrading acronym – PIIGGS (Portugal, Ireland, Italy, Greece, Great Britain and Spain). Assuming the so-called present value borrowing constraint, stationarity of debts presents a sufficient condition for fiscal sustainability. Utilizing various standard panel unit root tests and the test by Im et al. (2010), we examine this condition on quarterly debt-to-GDP ratios over the period 2000 to 2010. Results provide evidence, that when trend breaks in the series are incorporated, not all of these countries exhibit non-stationarity behavior of their debt-to-GDP ratios.
    Keywords: Fiscal sustainability; Government debt; Panel unit-root tests
    JEL: H62 E62 C23 H63
    Date: 2011–04–09
  13. By: Grzegorz Grabek (National Bank of Poland, Economic Institute); Bohdan Klos (National Bank of Poland, Economic Institute); Grzegorz Koloch (National Bank of Poland, Economic Institute)
    Abstract: The paper documents the effects of work on the dynamic stochastic general equilibrium (DSGE) SOEPL model that has been carried out in the recent years at the National Bank of Poland, initially at the Bureau of Macroeconomic Research and lately at the Bureau of Applied Research of the Economic Institute. In 2009, a team consisting of the authors of this paper developed a new version of the model, called SOEPL−2009 which in 2010 is to be used to obtain routine mid-term forecasts of the inflation processes and the economic trends, supporting and supplementing the traditional structural macroeconometric model and experts’ forecasts applied so far. In the recent years many researchers have engaged in the work over a class of estimated macroeconomic models (of the business cycle) integrating the effects of at least three important lines of economic and econometric research: • methods of macroeconomic modelling (gradual departure from the traditional structural models towards models resistant to Lucas’ and Sims’ critique, strongly motivated with microeconomics); • micro- and macroeconomic theories (monetary policy issues, with emphasis on the consequence of imperfect competition, the role of nominal and real rigidities, as well as anticipating and optimising behaviours of agents in an uncertain environment, with a strong shift of point of view towards general equilibrium); • estimation techniques (reduction in parameters calibration, shift from classical techniques to Bayesian techniques with Bayesian-specific risk quantification as well as systematic and controlled introduction of experts’ knowledge, improvement of projections accuracy). Merger of the three trends has brought about a class of models — DSGE models — with high analytical and developmental potential. The very potential of the models of this class seems to be the most important reason for the interest of central banks in that area, research that may be directly translated into the practice of monetary policy. Along with the development of numerical, econometric methods and the theory of economics, a number of central banks supplement or even replace the traditional structural macroeconometric models, whose forecasting applications are enhanced with experts’ knowledge, with estimated DSGE models, namely models which attempt to translate the economic processes in a more explicit and systematic manner, whereby experts’ knowledge is introduced through Bayesian methods. It happens although no formal reasons exist for which the ex post verified accuracy of forecasts within the DSGE models should be higher than that of classical models. DSGE models give, however, a chance of structural (internally consistent and microfounded) explanations of the reasons for the recently observed phenomena and their consequences for the future. DSGE models present a different image of economic processes than classical macroeconometric models — they capture the world from the perspective of structural disturbances. These disturbances set the economy in motion and economic agents respond to them in an optimal way, which eliminates the consequences of the disturbances, i.e. restores the economy to equilibrium. The analytical knowledge and experience gathered in contact with the traditional structural models rather interferes with than helps interpret the results of DSGE models. In econometric categories, the results of DSGE models are, nevertheless, at least partially compliant with that which may be achieved with VAR and SVAR models, thus, it is hard to speak about revolution here. Following the events of 2008–2009 (global financial crisis), while searching for the reasons for the problems’ occurrence, the usefulness of formalised tools constructed on a uniform, internally coherent (but also restrictive) paradigm for macroeconomic policy tends to be questioned. The reasons for the global economy problems are searched for in models oversimplifying perception of the world and burdening the decisions regarding economic policy. We have noticed that the critique refers to a larger extent to the models as such (i.e. tools) and less to the practice of applying them (i.e. the user). Therefore, we consider that conclusions from a deeper analysis of the sources of 2008–2009 crisis, verification of the directions of economic research and methods of the research, which is likely to be held, as well as the analysis of the current policy less influenced by its rationalisation shall confirm the legitimacy of building and applying models, particularly DSGE class models. The issue of applications using the strong sides of the models remains, however, open. In our opinion, the best we can do is to try to use our model, gather and exchange experience, develop new procedures and thoroughly verify the results. The model whose details we shall present further herein derives from the structure developed at Riksbank — DSGE model for the euro area see Adolfson et al. (2005b). The euro area DSGE model, know-how, methods of estimation and applications received within the technical support of Riksbank enabled us to start several experiments, build different versions of DSGE model (a family of SOEPL models) and develop our own procedures of the model application. Some of the experiments have been described in separate papers, e.g. Grabek et al. (2007), Grabek and Kłos (2009), Grabek and Utzig-Lenarczyk (2009). The alternative we present in this paper summarizes some of the gathered experience. We pass the DSGE SOEPL−2009 model for use, with a view to considering and analysing other interpretation and understanding of economic processes than that proposed by the traditional models. Additionally, systematic work with the model (preparing forecasts and analyses of their accuracy, simulation experiments and analytical works) may reveal issues and problems that will have to be solved. Resulting knowledge shall enable the preparation of a more thorough future modification of the model, taking into account the effects of the parallel research and the conclusions arrived at during use. This paper consists of three basic parts. In the first part — relatively independent of the other parts — we have made an attempt to outline the development of the methods of macroeconomic (macroeconometric) modelling and the economic thought related to monetary policy, which brought about the creation of dynamic stochastic general equilibrium models, pushing aside other classes of models — at least in the academic world. The considerations are illustrated with simple models of real business cycles (RBC) and DSGE model based on new Keynesian paradigm. The second chapter of the first part focuses on the technical aspects of construction, estimation and application of DSGE models, drawing attention to mathematical, statistical and numerical instruments. Although it presents only the keynotes, outlines and ideas, the formalisation and precision of presentation required in that case makes the fragment of the paper slightly hermetic — a reader less interested in the techniques may omit that chapter. The further parts of the paper refer to specification, results of estimations and properties of the DSGE SOEPL−2009 model. We present, therefore, a general non-technical outline of the basic features of the model, illustrating at the same time the correlations with other DSGE models (Chapter 3). The next chapter defines decision-making problems of the optimising agents, their equilibrium conditions as well as characteristics of behaviours of the non- optimising agents. The description of the model specification is completed with balance conditions on a macro scale. The SOEPL−2009 model has been estimated with the use of Bayesian techniques. Identically as in all estimated DSGE models we are aware of, the Bayesian estimation refers solely to some of the parameters (the rest of the parameters have been calibrated). Although due to the application of the Bayesian techniques, the number of calibrated parameters has been clearly reduced, being aware of the consequences of faulty calibration we conducted a sort of sensitivity analysis (examination of the influence of changes in the calibration of parameters on the characteristics of the model). The presented SOEPL−2009 version takes into account the conclusions we arrived at based on the analysis. For the purposes of this paper and the first forecast experiments we use only point estimates of the parameters reflecting the modal value of posterior distribution, in other words our reasoning omits — hopefully temporarily — the issue of uncertainty of the parameters. The results of the estimation of parameters and assumptions made at the subsequent stages of the work (calibrated values, characteristics of prior distributions) have been presented in Chapter 6. A synthetic image of the model characteristics has been presented in Chapters 7–8, which describes the responses of observable variables to structural disturbances taken into account in the model (i.e. impulse response functions), variances decompositions (formally — forecast error decomposition), thanks to which the structure (relative role) of the impact of shocks on the observable variables may be assessed, estimation (identification) of structural disturbances in the sample, examples of historical decompositions (counterfactual experiments) and information about the ex post accuracy of forecasts — this is, thus, a typical set of information allowing understanding the consequences of the assumptions made at the stage of constructing decisionmaking problems (model specification) and choice of parameters. The Appendix presents structural form equations, equations used to determine value at a steady state and a list of variables of the SOEPL−2009 model.
    Date: 2011
  14. By: Haberis, Alex (Bank of England); Markovic, Bojan (National Bank of Serbia); Mayhew, Karen (Bank of England); Zabczyk, Pawel (Bank of England)
    Abstract: This paper considers the implications for the United States, the United Kingdom and the rest of the world (ROW) of shocks that may contribute to a further reduction in global current account imbalances using a dynamic stochastic general equilibrium (DSGE) model. We consider a shock that increases domestic demand in the ROW; a shock that reduces domestic demand in the United States; and a supply shock that raises US productivity relative to other countries. The impact on UK output and inflation depends on the nature of the shock that drives global rebalancing. An increase in domestic demand in the ROW would raise UK exports and output, but would also contribute to increased inflationary pressure in the United Kingdom. Further weakness in US domestic demand is likely to weigh on UK output and inflation. Productivity gains in the United States relative to other countries would worsen the United Kingdom’s current account position, pushing down on output, but would lead to reduced inflationary pressure in the United Kingdom.
    Keywords: Global imbalances; Current account; DSGE models.
    JEL: D58 F41 F47
    Date: 2011–04–15
  15. By: Heise, Arne; Lierse, Hanna
    Abstract: --
    Date: 2011
  16. By: T. LE BARBANCHON (Insee); B. OURLIAC (Insee); O. SIMON (Insee)
    Abstract: Until the current economic crisis, the recovery capacity of the American and French labour markets had often been compared. The United States had been considered more "resilient", namely more affected by cyclical shocks in the short term but more quickly coming back to their initial path in the medium term. As this conclusion may be modified in the context of the current crisis, it is also relevant to study if it is actually valid on the previous period. Between 1986 and 2007, the output gap of the United States presented more pronounced fluctuations and came back to the equilibrium more rapidly. However, it does not mean that the United States were more resilient since it can also result from the fact that the American economy was affected by other kinds of shocks than the French economy. To distinguish which explanation is the most relevant, it is difficult to use an astructural approach. This study is therefore based on a structural approach directly inspired from Christoffel and Linzert (2005). We use two calibrated DSGE models, one for the French economy, the other for the United States, which include a labour market matching model à la Diamond, Mortensen and Pissarides. The comparison of the impulse response functions between the two models show that differences in resilience cannot be assessed globally: they depend on the shock which affects the economy. The differences are the most significant for shocks related to the labour market but they are less sensible for standard shocks like productivity shocks or monetary shocks. We use the same DSGE models to determine the nature of historical shocks between 1986 and 2007 and to assess the contributions of these shocks to output fluctuations. According to the models, the dynamics of the two economies on the period is thus characterized by different combinations of shocks, rather than different absorption capacity of these shocks.
    Keywords: Labour market, matching model, business fluctuations, DSGE model, resilience
    JEL: E24 E32 J64
    Date: 2011
  17. By: Borek Vasicek
    Abstract: Estimated Taylor rules became popular as a description of monetary policy conduct. There are numerous reasons why real monetary policy can be asymmetric and estimated Taylor rule nonlinear. This paper tests whether monetary policy can be described as asymmetric in three new European Union (EU) members (the Czech Republic, Hungary and Poland), which apply an inflation targeting regime. Two different empirical frameworks are used: (i) a Generalized Method of Moments (GMM) estimation of models that allow discrimination between the sources of potential policy asymmetry but are conditioned by specific underlying relations (Dolado et al., 2004, 2005; Surico, 2007a,b); and (ii) a flexible framework of sample splitting where nonlinearity enters via a threshold variable and monetary policy is allowed to switch between regimes (Hansen, 2000; Caner and Hansen, 2004). We find generally little evidence for asymmetric policy driven by nonlinearities in economic systems, some evidence for asymmetric preferences and some interesting evidence on policy switches driven by the intensity of financial distress in the economy.
    Keywords: monetary policy, inflation targeting, nonlinear Taylor rules, threshold estimation
    JEL: C32 E52 E58
    Date: 2010–12–01

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