A new, generalized, multivariate dimension-reduction method is presented for calculating statistical moments of the response of mechanical systems subject to uncertainties in loads, material properties, and geometry. The method involves an additive decomposition of an N -dimensional response function into at most S-dimensional functions, where S>N ; an approximation of response moments by momen...

Over the last decade, the simple instrument policy rule developed by Taylor (1993) has become a popular tool for evaluating monetary policy of central banks. As an extensive empirical analysis of the ECB’s past behaviour still seems to be in its infancy, we estimate several instrument policy reaction functions for the ECB which might shed a light on actual monetary policy in the euro area in th...

This paper analyzes a potential strategy for escaping liquidity traps. The strategy is based on an augmented Taylor-type interest-rate feedback rule and differs from usual specifications in that when inflation falls below a threshold, the central bank temporarily deviates from the traditional Taylor rule by following a deterministic path for the nominal interest rate. This path reaches the inte...

This paper considers macroeconomic real-financial market interactions in a Turnovsky (1986) two country framework with money, bonds, equities and a foreign exchange market with perfectly flexible exchange rates. It is based on conventional multiplier dynamics in its real part, augmented by either a simple LM curve or a simple Taylor interest rate policy rule, but enriched by a broad spectrum of...

This paper investigates how monetary policy can help to avoid the liquidity trap by studying the experience of Japan. First, I analyze how the Bank of Japan conducted interest rate policy over the 1990s as the economy entered a deflationary slump. I use a new method of estimating the policy rule with a time-varying inflation target and a time-varying natural rate of interest. The estimation str...