John Driffill

Investment Under Uncertainty with Stochastically Switching Profit Streams: Entry and Exit over the Business Cycle. (2003)

We study how entry and exit decisions of a monopolist are affected by business cycle conditions. We model the business cycle as a two-state Markov process, and assume that the demand curve faced by...

Investment Under Uncertainty with Stochastically Switching Profit Streams: Entry and Exit over the Business Cycle. (2003)

We study how entry and exit decisions of a monopolist are affected by business cycle conditions. We model the business cycle as a two-state Markov process, and assume that the demand curve faced by...

Investment Under Uncertainty with Stochastically Switching Profit Streams: Entry and Exit over the Business Cycle. (2003)

We study how entry and exit decisions of a monopolist are affected by business cycle conditions. We model the business cycle as a two-state Markov process, and assume that the demand curve faced by...

Inflation targeting, exchange rate volatility and international policy coordination (2002)

We study how entry and exit decisions of a monopolist are affected by business cycle conditions. We model the business cycle as a two-state Markov process, and assume that the demand curve faced by...

Driffill, John, Spagnolo, Fabio

In a linear rational expectations two-country model, using an ag- gregate demand, aggregate supply framework, we analyse the ejects of the adoption of an inflation targeting regime on exchange rate...

Inflation targeting and exchange rate co-ordination (2001)

Driffill, John, Spagnolo, Fabio

In a linear rational expectations two-country model, using an aggregate demand-aggregate supply framework, we analyze the effects of the adoption of an inflation targeting regime on exchange rate...

No credit for transition: efficiency wages, the Maastricht Treaty and German unemployment (1998)

WAGE SETTING AND STABILIZATION POLICY IN A GAME WITH RENEGOTIATION (1992)

Germany is generally regarded as the nominal anchor for Europe. Its participation is the sine qua non of EMU. It has been the largest net contributor to EU finances, the leading proponent of greater...

DRIFFILL, JOHN, SCHULTZ, CHRISTIAN

Delegation of Monetary Policy: More than a Relocation of the Time-Inconsistency Problem

Driffill, John, Rotondi, Zeno

It has been argued that delegation of monetary policy to an independent central bank, which acts as an agent for the government, does not mitigate the problem of time-inconsistency, but merely...

Renegotiation in Repeated Cournot-Duopoly

John Driffill, Christian Schultz

We investigate a repeated Cournot duopoly with strictly convex cost functions. In an example the set of Weakly Renegotiation Proof Equilibrium payoffs shrinks towards the joint profit maximizing...

Costs of inflation

Driffill, John, Mizon, Grayham E., Ulph, Alistair, B. M. Friedman, F. H. Hahn

Credibility and Commitment in Economic Policy

The Consistency of Optimal Policy in Stochastic Rational Expectations Models

Dynamic inconsistency provides a theoretical basis for discussions of policy credibility: when the government cannot commit its future policies, the incentive to deviate from the 'optimal' plan...

Macroeconomic Policy Games with Incomplete Information: Some Extensions

This paper extends the work of Barro and Gordon (1983) to general linear models with rational expectations. We examine the question whether the optimal policy rule, i.e. the one that a government...

John Driffill

In several recent papers macroeconomic policy has been modelled in the context of a game of incomplete information. A central result of the work by Backus and Driffill and by Barro is that the...

Costs of Inflation

John Driffill, Grayham E Mizon, Alastair Ulph

We review theoretical and empirical analyses of the costs of inflation. Part 2 of the paper examines microeconomic models in which inflation is perfectly anticipated, and viewed as the only...

A Reconciliation of Some Paradoxical Empirical Results on the Expectations Model of the Term Structure

John Driffill, Zacharias Psaradakis, Martin Sola

No Credit for Transition:Efficiency Wages, the Maastricht Treaty and German Unemployment

Driffill, John, Marcus Miller

Germany is generally regarded as the nominal anchor for Europe. Its participation is the sine qua non of EMU. It has been the largest net contributor to EU finances, the leading proponent of greater...

Credibility and Commitment in Economic Policy

Credible Disinflation in Closed and Open Economies

Dynamic inconsistency provides a theoretical basis for discussions of policy credibility: when the government cannot commit its future policies, the incentive to deviate from the 'optimal' plan...

Rational Expectations and Policy Credibility Following a Regime Change

We examine the credibility of disinflation policy in an economy with staggered wage contracts. The dynamic inconsistency of the government's optimal plan is the source of the credibility problem. If...

We examine the economy after a regime change, when neither the policy nor the reactions of the public are known. This is an application of Kreps and Wilson's reputation model to Barro and Gordon's...

Inflation and Reputation

Target zones for exchange rates and policy changes

In many macroeconomic models with rational expectations, optimal policy is time inconsistent, and therefore announced policy may not be credible. This paper models the government's credibility...

Driffill, John, Sola, Martin

Monetary policy and financial stability: What role for the futures market?

Driffill, John, Rotondi, Zeno, Savona, Paolo, Zazzara, Cristiano

The Term Structure of Interest Rates, Structural Stability and Macroeconomic Policy Changes in the UK

Credibility of Optimal Monetary Delegation: Comment

This paper examines data on interest rates in the United Kingdom information on changes in policy regime and their credibility in order to discover the period from 1959-87 using quarterly data. A...

John Driffill, Zeno Rotondi

Inertia in Taylor Rules

John Driffill, Zeno Rotondi

The inertia found in econometric estimates of interest rate rules is a continuing puzzle. Many reasons for it have been offered, though unsatisfactorily, and the issue remains open. In the empirical...

Structural Unemployment in Europe: Reasons and Remedies. Edited by MARTIN WERDING

JOHN DRIFFILL

Inertia in Taylor Rules

Driffill, John, Rotondi, Zeno

The inertia found in econometric estimates of interest rate rules is a continuing puzzle. Many reasons for it have been offered, though unsatisfactorily, and the issue remains open. In the empirical...

Merton-style option pricing under regime switching

John Driffill, Turalay Kenc, Martin Sola

Option pricing, regime switching

Delegation of Monetary Policy: More than a Relocation of the Time-Inconsistency Problem

Zeno Rotondi, John Driffill

credibility, delegation, time-inconsistency, independent central banks, monetary policy

Monopoly Unions and the Liberalisation of International Trade.

Driffill, John, Van Der Ploeg, Frederick

The authors examine the effects of removing tariffs and trade barriers on the behavior of utilitarian trade unio ns using a two-country macroeconomic model. A "hump-shaped" relationshi p between...

Learning and Inflation Convergence in the ERM.

Driffill, John, Miller, Marcus

This paper develops a model where agents learn about the probability of devaluations in a fixed exchange rate regim e. The true probability of devaluation is assumed to be low (or zero) b ut agents...

An Empirical Examination of Term Structure Models with Regime Shifts

Kenc, Turalay, John Driffill, Martin Sola

We examine several continuous-time term structure models in which the short rate is subject both to continuous changes and to discrete shifts. Several regime-switching term structure models are...

Testing the Expectations Hypothesis of the Term Structure Using Instrumental Variables.

Driffill, John, Psaradakis, Zacharias, Sola, Martin

This paper demonstrates, by means of Monte Carlo experimentation, that tests of the expectations hypothesis of the term structure based on instrumental variables regressions of the change in the...

Intrinsic bubbles and regime-switching

Driffill, John, Sola, Martin

Growth and Finance

John Driffill

I review selectively some of the trends in research on the relationships between financial markets and economic growth. Economic theory provides many arguments as to why, given the widespread...

Inflation Targeting, Exchange Rate Volatility and International Policy Coordination.

Alexandre, Fernando, Driffill, John, Spagnolo, Fabio

In a linear rational expectations two-country model, using an aggregate demand, aggregate supply framework, we analyse the effects of the adoption of an inflation-targeting regime on exchange rate...

A Reconciliation of Some Paradoxical Empirical Results on the Expectations Model of the Term Structure.

Driffill, John, Psaradakis, Zacharias, Sola, Martin

In this paper, the authors attempt to reconcile contradictory empirical results for the expectations model of the term structure which are found when it is tested by a variety of methods based on...

Trade Liberalization with Imperfect Competition in Goods and Labour Markets.

Driffill, John, Van Der Ploeg, Frederick

The effects of removing tariffs and trade barriers on the behavior of utilitarian monopoly trade unions are considered. A model of intraindustry trade in differentiated commodities under monopolistic...

Macroeconomic Stabilization Policy and Trade Union Behaviour as a Repeated Game.

No Credit for Transition: European Institutions and German Unemployment

John Driffill, Marcus Miller

The Stability and Growth Pact, adopted by members of the European Union, imposes tight limits on government deficits. But since the collapse of Communism, Europe has been faced with the problems of...

Testing the term structure of interest rates using a stationary vector autoregression with regime switching

Sola, Martin, Driffill, John

Changes in regime and the term structure: A note

Optimal monetary policy with a regime-switching exchange rate in a forward-looking model

Fernando Alexandre, Pedro Bação, John Driffill

We evaluate the macroeconomic performance of different monetary policy rules when there is exchange rate uncertainty. We do this in the context of a non-linear rational expectations model. The...

Inertia in Taylor Rules

John Driffill, Zeno Rotondi

The inertia found in econometric estimates of interest rate rules is a continuing puzzle. Many reasons for it have been offered, though unsatisfactorily, and the issue remains open. In the empirical...

The Centralization of Wage Bargaining Revisited: What Have we Learnt?

JOHN DRIFFILL

The original article with Lars Calmfors predicted that highly coordinated or centralized bargaining would lead to wage restraint and low unemployment. Despite shortcomings, this prediction has...

Rational Expectations and Policy Credibility Following a Change in Regime.

Inflation and Reputation.

Macroeconomic policy games with incomplete information : A survey

Renegotiation in a repeated Cournot duopoly

Driffill, John, Schultz, Christian

No Credit for Transition: The Maastricht Treaty and German Unemployment

Driffill, John, Miller, Marcus

Germany is generally regarded as the nominal anchor for Europe. Its participation is the sine qua non of EMU. It has been the largest net contributor to EU finances, the leading proponent of greater...

Credibility and Commitment in Economic Policy

The Consistency of Optimal Policy in Stochastic Rational Expectations Models

Dynamic inconsistency provides a theoretical basis for discussions of policy credibility: when the government cannot commit its future policies, the incentive to deviate from the 'optimal' plan...

Macroeconomic Policy Games with Incomplete Information: Some Extensions

This paper extends the work of Barro and Gordon (1983) to general linear models with rational expectations. We examine the question whether the optimal policy rule, i.e. the one that a government...

Driffill, John, Mizon, Grayham Ernest, Ulph, Alistair Mitchell

In several recent papers macroeconomic policy has been modelled in the context of a game of incomplete information. A central result of the work by Backus and Driffill and by Barro is that the...

Costs of Inflation

We review theoretical and empirical analyses of the costs of inflation. Part 2 of the paper examines microeconomic models in which inflation is perfectly anticipated, and viewed as the only...

Real Interest Rates, Nominal Shocks, and Real Shocks

Product Market Integration and Wages: Evidence from a Cross-Section of Manufacturing Establishments in the United Kingdom

This paper uses a structural time-series analysis to analyse the properties of ex-ante real interest rates of the five major OECD economies in relation to temporary and permanent shocks to real...

Driffill, John, Meschi, Meloria, Ulph, Alistair Mitchell

Theory predicts that when economies become more integrated through the removal of tariff and other barriers to trade, resulting in an increase in competition in product markets, there should be...

On Model Selection and Markov Switching: A Empirical Examination of Term Structure Models with Regime Shifts

Driffill, John, Kenc, Turalay, Sola, Martin, Spagnolo, Fabio

We examine several continuous-time term-structure models, in which the short rate is subject to discrete shifts. Our empirical analysis suggests that inquiring which parameters of the short-term...

Monetary Policy and Lexicographic Preference Ordering

Driffill, John, Rotondi, Zeno

In this Paper we argue that the objectives given to the European Central Bank in the Maastricht Treaty are not well represented by the widely used weighted sum of squared deviations of inflation and...

What Moves OECD Real Interest Rates?

Driffill, John, Snell, Andrew

This paper conducts a structural time-series analysis of ex-ante real interest rates of the five major OECD economies. The relationships of rates to permanent and temporary real and nominal shocks...

Investment Under Uncertainty with Stochastically Switching Profit Streams: Entry and Exit over the Business Cycle.

John Driffill, Marzia Raybaudi, Martin Sola

We study how entry and exit decisions of a monopolist are affected by business cycle conditions. We model the business cycle as a two-state Markov process, and assume that the demand curve faced by...

Wage Setting and Stabilization Policy in a Game with Renegotiation.

Driffill, John, Schultz, Christian

Optimal monetary policy with a regime-switching exchange rate in a forward-looking model

Fernando Alexandre, Pedro Bação, John Driffill

We evaluate the macroeconomic performance of different monetary policy rules when there is exchange rate uncertainty. We do this in the context of a non-linear rational expectations model. The...

Macroeconomic Policy Games with Incomplete Information - A Survey