Central banks and gold puzzles

What Should Central Banks Do?

I the last twenty years, there has been substantial rethinking about how central banks should do their job. This rethinking has led to major changes in how central banks operate, and we are now in an era in which central banks in many countries throughout the world have had notable success—keeping inflation low, while their economies experience rapid economic growth. In this lecture, I outline ...

How Central Banks End Crises

To end a financial crisis, the central bank is to lend freely, against good collateral, at a high rate, according to Bagehot’s Rule. We argue that in theory and in practice there is a missing ingredient to Bagehot’s Rule: secrecy. Re-creating confidence requires that the central bank lend in secret, hiding the identities of the borrowers, to prevent information about individual collateral from ...

New Economy , Old Central Banks ?

DSGE models and central banks, September 2008

Over the past 15 years there has been remarkable progress in the specification and estimation of dynamic stochastic general equilibrium (DSGE) models. Central banks in developed and emerging market economies have become increasingly interested in their usefulness for policy analysis and forecasting. This paper reviews some issues and challenges surrounding the use of these models at central ban...

Central Banks and the Financial System

I am pleased to appear before you to discuss the role of central banks and the financial system in the specific context of the recent efforts on the part of a number of Eastern European countries and the Soviet Union to shift their economies toward more marketoriented and competitive systems. I am especially pleased to have the opportunity to discuss these issues in the presence of the distingu...