Government spending policy has an important macroeconomic stabilization role. We empirically revisit the computation of fiscal cyclicality measures by employing a novel time-varying approach while explicitly dealing with endogeneity concerns. Analyzing sample 36 advanced economies from 1970 to 2015, focus paper is on side budget and its components. The average government −0.9, pointing counter-...

Oil price shocks are the main source of macroeconomic fluctuations in oil exporting countries. It is believed that appropriate monetary policy can help to stabilize these unwanted variations toward optimal allocations. A stochastic dynamic general equilibrium model featuring the properties of both cost push and wealth effect transmission channels is developed for the Iranian economy. In thi...

The aim of this paper is to evaluate the impact of monetary policy in tests of the Expectations Hypothesis of the term structure of interest rates. We apply the model developed by McCallum (1994b), in which the Expectations Hypothesis interacts with a policy reaction function and with a time-varying term premium, to eight countries with different monetary policy stances, within the period 1985 ...

Since 2007, many monetary authorities have drastically changed its monetary policy. They began an aggressive struggle with the biggest economic crisis since the Great Depression. Despite the substantial decline in Central banks interest rates in US and EMU and despite the sharp easining of monetary policy in many other countries, the cost of credit to both households and businesses has generall...

The European Union (EU) countries have started the Economic and Monetary Union (EMU) on January 1, 1999. With the EMU, the EU countries replaced their national currencies and national monetary policy autonomy by a common currency, the Euro, and a common monetary policy that is designed and implemented by the European Central Bank (ECB). A common currency was considered to form the completion of...

This paper examines how alternative views of the monetary transmission mechanism affect the choice of a monetary policy rule. The main finding is that many different structural models indicate that the same simple monetary policy rule—one in which the central bank’s target short-term interest rate reacts to inflation and to real output—would perform well. Such rules work well even in models whe...

We study the transmission of monetary policy in credit economies where money serves as a medium of exchange. We find that—in contrast to current conventional wisdom in policy-oriented research in monetary economics—the role of money in transactions can be a powerful conduit to asset prices and ultimately, aggregate consumption, investment, output, and welfare. Theoretically, we show that the ca...