Monthly Archives: February 2016

Forward guidance

According to economic theory, one of the most promising ways in which monetary policy might be able to stimulate an economy in which the nominal interest rate has reached zero is to promise to follow a different policy rule once interest rates are again positive. A commitment to more stimulus and inflation in the future regime could in principle influence expectations and actions of people in the economy today, and thereby offer a means by which the central bank could help an economy recover from the zero lower bound. But as a practical matter, how does the Fed communicate to the public at date t something it intends to do at some future date t+h?
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Guest Contribution: “How to Mitigate Adverse Spillovers from BRICS? Role of Policies”

Today we are pleased to present a guest contribution written by Raju Huidrom, M. Ayhan Kose, Franziska Ohnsorge, and Lei Sandy Ye, all of the World Bank. The findings, interpretations, and conclusions expressed in this article are entirely those of the authors. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.

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Guest Contribution: “Argentina: A Big Change with Problematic Initial Conditions”

Today, we are pleased to present a guest contribution written by Maria Muniagurria, faculty member in Economics at the University of Wisconsin – Madison.

A little over two months ago, Mauricio Macri began his tenure as president after his coalition of center-right parties prevailed over the ruling party’s candidate by a small margin.

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Chinese Foreign Currency External Debt

One constraint on devaluation as a means of stimulating the economy comes from the balance sheet. When there is a big stock of external debt denominated in foreign currency, a devaluation increases the amount of debt evaluated in domestic currency terms, potentially driving some firms into insolvency. How does China look in these terms?

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The Counter-cyclical Stabilization Policies of the Democratic Presidential Candidates

In this post, I assess how the candidates would implement macroeconomic stabilization policy, given the big reform packages proposed by the candidates, in particular those by Senator Sanders, are highly unlikely to be passed by a fully or partly Republican Congress. On the other hand, a downturn in the next four years is much more plausible; hence, knowing the candidates’ views on macro stabilization policy is arguably more relevant.

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