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Monetary Policy under Market Imperfections
The Agenda:
The research area analyzes the transmission mechanism and the effectiveness of monetary policy in a world of rigidities and market imperfections. As a starting point, we take the observed inflation and output persistence, which is difficult to explain with standard new Keynesian models. Augmenting these models with real-world features like imperfect competition and unemployment, we expect to improve the model fit. In particular, we aim at answering the following research questions:
- To what extent does imperfect competition affect the effectiveness of monetary policy?
- To what extent does unemployment affect the effectiveness of monetary policy?
- How do lagged adjustment processes in labor market and product markets interact?
- Does a deviation from neoclassical labor markets influence the optimal conduct of monetary policy?
- How do supply-side rigidities interact with the real effects of monetary policy?
- What are the medium- and long-run effects of monetary policy on real macroeconomic activity?
- What are the open economy implications?
Networking:
In 2006 the Kiel Institute has founded the monetary-macroeconomics network. It consists of more than 40 renowned international scholars. Recent events include the symposium on "The Phillips Curve and the Natural Rate of Unemployment" in June 2007. Part of the papers will be published in a cluster of the European Economic Review.
Projects
Recent Publications
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Forthcoming
- Aßmann, C., Hogrefe, J. (Forthcoming). Analysis of Current Account Reversals via Regime Switching Models. Economic Change and Restructuring
- Campolmi, A., Faia, E. (Forthcoming). Labor Market Institutions and Inflation Volatility in the Euro Area. Journal of Economic Dynamics and Control, 28 pp.
- Karanassou, M., Sala, H., Snower, D. (Forthcoming). Phillips Curves and Unemployment Dynamics: A Critique and a Holistic Perspective. Journal of Economic Surveys
- Lechthaler, W., Merkl, C., Snower, D. (Forthcoming). Monetary Persistence and the Labor Market: A New Perspective. Journal of Economic Dynamics and Control
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2009
- Angeloni, I., Faia, E. (2009). A Tale of Two Policies: Prudential Regulation and Monetary Policy with Fragile Banks. Kiel Working Paper, 1569, The Kiel Institute for the World Economy, Kiel, 46 pp.
- Ascari, G., Merkl, C. (2009). Real Wage Rigidities and the Cost of Disinflations. Journal of Money, Credit, and Banking, 41 (2-3), 417-435.
- Aßmann, C., Hogrefe, J., Jannsen, N. (2009). Costs of Housing Crises: International Evidence. Kiel Working Paper, 1524, Kiel Institute for the World Economy, Kiel, 9 pp.
- Aßmann, C., Hogrefe, J., Liesenfeld, R. (2009). The Decline in German Output Volatility: A Bayesian Analysis. Empirical Economics, 37, 653-679.
- Carstensen, K., Hagen, J., Hossfeld, O., Neaves, A. (2009). Money Demand Stability and Inflation: Prediction in the Four Largest EMU Countries. Scottish Journal of Political Economy, 56(1), 73-93.
- Faia, E., (2009). Oligopolistic Competition and Optimal Monetary Policy. Kiel Working Paper, 1552, The Kiel Institute for the World Economy, Kiel, 28 pp.
- Faia, E., Lechthaler, W., Merkl, C. (2009). Labor Turnover Costs, Workers' Heterogeneity and Optimal Monetary Policy. Kiel Working Paper, 1534, Kiel Institute for the World Economy, 38 pp.
- Faia, E., (2009). Ramsey Monetary Policy with Labour Market Frictions. Journal of Monetary Economics, 56(4): 570-581, 38 pp.
- Faia, E., Rossi, L. (2009). Unions Power, Collective Bargaining and Optimal Monetary Policy. Kiel Working Papers, 1490, Kiel Institute for the World Economy, Kiel, 32 pp..
- Gartner, H., Merkl, C., Rothe, T. (2009). They Are Even Larger! More (on) Puzzling Labor Market Volatilities. Kiel Working Paper, 1545, 28 pp.
- Golosnoy, V., Hogrefe, J. (2009). Sequential Methodology for Signaling Business Cycle Turning Points. Kiel Working Paper, 1528, Kiel Institute for the World Economy, Kiel, 26 pp.
- Jannsen, N. (2009). National and International Business Cycle Effects of Housing Crises. Kiel Working Paper, 1510, Institut für Weltwirtschaft, Kiel, 23 pp.
- Jonas, D., Jannsen, N., Scheide, J. (2009). Die Bedeutung monetärer Größen für die deutsche Wachstumsschwäche 1995-2005. Jahrbuch für Wirtschaftswissenschaften, 60(1), 17-36.
- Merkl, C., Stolz, S. (2009). Banks’ Regulatory Buffers, Liquidity Networks and Monetary Policy Transmission. Applied Economics, 41 (16), 2013-2024.
- Merkl, C., Schmitz, T. (2009). Macroeconomic Volatilities and the Labor Market: First Results from the Euro Experiment. Kiel Working Paper, 1511, Kiel Institute for the World Economy, 24 pp.
- Merkl, C., Snower, D. (2009). Monetary Persistence, Imperfect Competition and Staggering Complementarities. Macroeconomic Dynamics, Vol. 13, pp. 81-106.
- Reicher, C. (2009). Expectations, Monetary Policy, and Labor Markets: Lessons from the Great Depression. Kiel Working Papers, 1543, Ifw Kiel, Kiel, 55.
- Reicher, C. (2009). Expectations, Monetary Policy, and Labor Markets: Lessons from the Great Depression. Kiel Working Paper, 1543, Kiel Institute for the World Economy, 55 pp.
- Reicher, C. (2009). Fiscal Taylor Rules in the Postwar United States. Kiel Working Paper, 1509, Kiel Institute for the World Economy, Kiel, 27 pp.
- Reicher, C. (2009). What Can a New Keynesian Labor Matching Model Match?. Kiel Working Papers, 1496, Kiel Institute for the World Economy, Kiel, 50.
- van Roye, B., Wesselbaum, D. (2009). Capital, Endogenous Separations, and the Business Cycle. Kiel Working Paper, 1561, The Kiel Institute for the World Economy, Kiel, 25 pp.
- Wesselbaum, D. (2009). Firing Costs in a New Keynesian Model with Endogenous Separations. Kiel Working Paper, 1550, The Kiel Institute for the World Economy, Kiel, 28 pp..
- Winkler, R., Wohltmann, H. (2009). On the (de)stabilizing effects of news shocks. Kiel Working Paper, 1542, Kiel Institute for the World Economy, Kiel, 7 pp.
- Wohltmann, H., Winkler, R. (2009). On the Non-Optimality of Information: An Analysis of the Welfare Effects of Anticipated Shocks in the New Keynesian Model. Kiel Working Paper, 1497, Kiel Institute for the World Economy, Kiel, 43 pp.
- Wohltmann, H., Winkler, R. (2009). Rational Expectations Models with Anticipated Shocks and Optimal Policy: A General Solution Method and a New Keynesian Example. Kiel Working Paper, 1507, Kiel Institute for the World Economy, Kiel, 27 pp.
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2008
- Döpke, J., Dovern, J., Fritsche, U., Slacalek, J. (2008). The Dynamics of European Inflation Expectations. The B.E. Journal of Macroeconomics, 8(1)
- Döpke, J., Dovern, J., Fritsche, U., Slacalek, J. (2008). Sticky Information Phillips Curves: European Evidence. Journal of Money, Credit, and Banking, 40 (7), 1513-1519.
- Dovern, J., Fritsche, U. (2008). Estimating Fundamental Cross-Section Dispersion from Fixed Event Forecasts. Discussion Papers, 787, DIW, Berlin
- Dovern, J., Ziegler, C. (Forthcoming). Predicting Growth Rates and Recessions. Assessing U.S. Leading Indicators Under Real-Time Conditions. Applied Economics Quarterly, 54
- Graham, L., Snower, D. (2008). Hyperbolic Discounting and the Phillips Curve. Journal of Money, Credit, and Banking, 40 (2-3), 427-448.
- Hoeberichts, M., Tesfaselassie, M., Eijffinger, S. (2008). Central Bank Communication and Output Stabilization. Oxford Economic Papers, Advance Access Published Online, 17 pp.
- Hogrefe, J. (2008). Forecasting data revisions of GDP: a mixed frequency approach . AStA Advances in Statistical Analysis, 92, 271-296.
- Karanassou, M., Sala, H., Snower, D. (2008). Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve and Economic Policy. Journal of Policy Modeling, 30(2), 279-300.
- Karanassou, M., Sala, H., Snower, D. (2008). The Evolution of Inflation and Unemployment: Explaining the Roaring Nineties. Australian Economic Papers, Vol. 47(4), 334-354.
- Lechthaler, W., Snower, D. (2008). Quadratic Labor Adjustment Costs and the New-Keynesian Model. Kiel Working Papers, 1453, Kiel Institute for the World Economy, Kiel, 7 pp.
- Lechthaler, W., Merkl, C., Snower, D. (2008). Monetary Persistence and the Labor Market: A New Perspective. Kiel Working Papers, 1409, Kiel Institute for the World Economy , Kiel, 26 pp.
- Rosa, C., Verga, G. (2008). The Impact of Central Bank Announcements on Asset Prices in Real Time. International Journal of Central Banking
- Vaona, A., Snower, D. (2008). Increasing Returns to Scale and the Long-Run Phillips Curve. Economics Letters, 100(1), 83-86.
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2007
- Carstensen, K., Hagen, J., Hossfeld, O., Neaves, A. (2007). Money Demand and Money Overhang in the Four Largest EMU Countries.
- Eijffinger, S., Tesfaselassie, M. (2007). Central Bank Forecasts and Disclosure Policy: Why It Pays to be Optimistic. European Journal of Political Economy, 23, 30-50.
- Engler, P., Jokipii, T., Merkl, C., Rovira Kaltwasser, P., Vinhas de Souza, L. (2007). The Effect of Capital Requirement Regulations on the Transmission of Monetary Policy: Evidence from Austria. Empirica, 34, 411-425.
- Hammermann, F. (2007). Nonmonetary Determinants of Inflation in Romania: A Decomposition. Kiel Working Paper, 1322, Kiel Institute for the World Economy, Kiel, 21 pp.
- Hammermann, F., Flanagan, M. (2007). What Explains Persistent Inflation Differentials Across Transition Economies?. Working Paper, 1373
- Karanassou, M., Sala, H., Snower, D. (2007). The Evolution of Inflation and Unemployment: Explaining the Roaring Nineties. Kiel Working Paper, 1350, Institut für Weltwirtschaft, Kiel, 26 pp.
- Rosa, C., Verga, G. (2007). On the Consistency and Effectiveness of Central Bank Communication: Evidence from the ECB. European Journal of Political Economy, 23, 146-175.
- Rosa, C., (2007). Providing Content to ECB Announcements. Rivista Internazionale di Scienze Sociali
- Rosa, C., (2007). Talking Less and Moving in the Market More: Is this the Recipe for Monetary Policy Effectiveness? Evidence from the ECB and the FED. CEP Discussion Paper, 855
- Vaona, A. (2007). Merging the Purchasing Power Parity and the Phillips Curve Literatures. International Regional Science Review, 30 (2), 152-172.
- Vaona, A., Schiavo, S. (2007). Nonparametric and Semiparametric Evidence on the Long-Run Effects of Inflation on Growth. Economics Letters, 94 (3), 452-458.
- Vaona, A., Ascari, G. (2007). Regional Patterns of Inflation Persistence in Italy. Quaderni di Dipartimento, 192 (02-07)
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2006
- Carstensen, K., Colavecchio, R. (2006). Did the Revision of the ECB Monetary Policy Strategy Affect the Reaction Function?. Rivista Italiana degli Economisti, 11, 395-402.
- Carstensen, K. (2006). Estimating the ECB Policy Reaction Function. German Economic Review, 7, 01.01.34.
- Carstensen, K. (2006). Stock Market Downswing and the Stability of European Monetary Union Money Demand. Journal of Business & Economic Statistics, 24, 395-402.
- Merkl, C., Stolz, S. (2006). Banks’ Regulatory Buffers, Liquidity Networks and Monetary Policy Transmission. Bundesbank Discussion Paper, Series 2: Banking and Financial Studies, No. 6/2006
- Rosa, C., Verga, G. (2006). The Impact of Central Bank Announcements on Asset Prices in Real Time: Testing the Efficiency of the Euribor Futures Market. CEP Discussion Paper, 764
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2005
- Esanov, A., Merkl, C., Vinhas de Souza, L. (2005). Monetary Policy Rules for Russia. Journal of Comparative Economics, 33 (3), 484–499.
- Karanassou, M., Sala, H., Snower, D. (2005). A Reappraisal of the Inflation-Unemployment Tradeoff. European Journal of Political Economy, 21(1), 1-32.
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2002
- Karanassou, M., Snower, D. (2002). An Anatomy of the Phillips Curve. IZA Discussion Paper, 635, IZA, Bonn, 19 pp.
