The recent global financial crisis illustrates that financial frictions are a significant source of volatility in the economy. This paper investigates monetary policy stabilization in an environment where financial frictions are a relevant source of macroeconomic fluctuation. We derive a measure of output gap that accounts for frictions in financial market. Furthermore we illustrate that, in the presence of financial frictions, a benevolent central bank faces a substantial trade-off between nominal and real stabilization; optimal monetary policy significantly reduces fluctuations in price and wage inflations but fails to alleviate the output gap volatility. This suggests a role for macroprudential policies.
The recent global financial crisis illustrates that financial frictions are a significant source of volatility in the economy. This paper investigates monetary policy stabilization in an environment where financial frictions are a relevant source of macroeconomic fluctuation. We derive a measure of output gap that accounts for frictions in financial market. Furthermore we illustrate that, in the presence of financial frictions, a benevolent central bank faces a substantial trade-off between nominal and real stabilization; optimal monetary policy significantly reduces fluctuations in price and wage inflations but fails to alleviate the output gap volatility. This suggests a role for macroprudential policies.
Medieval Sovereignty examines the idea of sovereignty in the Middle Ages and asks if it can be considered a fundamental element of medieval constitutional order. Francesco Maiolo analyzes the writings of Marsilius of Padua (1275/80-1342/43) and Bartolous of Saxoferrato (1314-57) and assesses their relative contributions as early proponents of popular sovereignty. Both are credited with having provided the legal justification for medieval popular government. Maiolo's cogent reconsideration of this primacy is an important addition to current medieval studies.
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