In developing countries, weak institutional quality can increase the probability of applying discretionary policies and can have a great impact on their double-digit inflation. Surico (2008) calculated inflation bias, but he considered just monetary policy and he did not pay attention to the institutions. Therefore, we design a model which considers the discretion in monetary and fiscal policie...

This paper evaluates the interacted effects of the fiscal and monetary policies on the nominal and real macro-variables of the Iranian economy. Our analysis is thus based on the optimal control theory by which the optimal path of the control variables including monetary and fiscal tools are determined over the period 1963-2006. We also use a macro-econometric model in form of a simultaneous equ...

a r t i c l e i n f o JEL classification: C22 E44 F31 Keywords: Monetary shocks Asymmetric effects MSVAR–EGARCH In this paper, we study the effect of monetary shocks on the Chinese stock market over the period of 2005 to 2011 with the MSVAR–EGARCH model. The evidence suggests that Chinese monetary policies have significantly asymmetric effects on the stock market in different time periods and m...

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...