Once upon a time, protection of human health and the natural environment did not seem to require economic analysis. Before the 1980s, public health and environmental policies were debated primarily on scientific, ethical, and legal grounds, with less emphasis on costs – let alone monetized benefits. More recently, it has become the norm to assume the need for cost-benefit analysis of new polici...

Despite the increasing number of studies on monetary policy uncertainty, its role on the strategic interaction between fiscal and monetary policies has not been fully explored. Our paper aims to fill this gap by evaluating the consequences produced by multiplicative uncertainty in such a context. J.E.L. Classification: E61, E63.

We study the optimal monetary policy in a two-country open-economy model under two monetary arrangements: (a) multiple currencies controlled by independent policy makers; (b) common currencies with a centralized policy maker. Our findings suggest that: (i) Monetary policy competition leads to higher long-term inflation and interest rates with large welfare losses; (ii) The inflation bias and th...

I characterize a large family of monetary policies that implement Milton Friedman’s prescription of zero nominal interest rates in a monetary search economy with multiple assets and aggregate uncertainty. This family of optimal policies is defined by two properties: (i) the money supply must be arbitrarily close to zero for an infinite number of dates, and (ii) asymptotically, on average (over ...

This paper explores how sensitive is monetary policy to the precise preferences of the central bank over inflation and economic activity. It does so in order to address a puzzle—which is that the U.S. Fed and the Bank of England appear to have quite different objectives and yet have adopted strikingly similar policies in recent years. I use a calibrated model to assess how policy might be sensi...

The interaction between fiscal and monetary policy is analyzed by means of a game theoretical approach. The coordination between those two policies is essential, since decisions taken by one institution may have disastrous effects on the other one, resulting in welfare loss for the society. We derived optimal monetary and fiscal policies in context of three coordination schemes: when each insti...

The global economy is in turmoil. In this scenario, monetary policies around the world face strong challenges. Sailing through quiet waters has been pleasant. As we know, the stable and prosperous performance of the world economy in recent years has partly been the result of sound monetary policies. Now, during difficult times, monetary policy should contribute to make the adjustment less costl...

In a recent paper,3 Professors Stein and Nagatani (SN) have examined monetary stabilization policies in a full employment nonlinear monetary growth model. Specifically, they try to give a " rigorous answer " to the question of which should be the correct control variable of monetary policy; i.e., money supply growth, interest rates, or some other variable. The model used is of the Keynes-Wickse...