A New Two Pillar Strategy For The Ecb
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A New Two Pillar Strategy For The Ecb
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Author : Paul De Grauwe
language : en
Publisher:
Release Date : 2009
A New Two Pillar Strategy For The Ecb written by Paul De Grauwe and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
The ECB has been arguing in the past that since there is no trade-off between price stability and financial stability, the pursuit of price stability is the best a central bank can do to also maintain financial stability. We argue that there is a potential trade-off between price stability and financial stability. In order to make this trade-off less constraining we propose that the two-pillar strategy of the ECB should be reformed. In this new two-pillar strategy, the ECB should pursue two objectives, i.e. price stability and financial stability. In this new strategy the interest rate should be used to achieve the inflation objective, while other instruments (minimum reserve requirements and macro prudential control) should be used to achieve financial stability.
The Two Pillar Strategy Of The Ecb
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Author :
language : en
Publisher:
Release Date : 2019
The Two Pillar Strategy Of The Ecb written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Inflation has remained below the ECB's own target of 'below, but close to 2%' for a long time despite massive doses of unconventional policies, suggesting that the present 'two pillar' strategy does not work. A review of the strategy will be useful only if it is entrusted to independent experts. Otherwise, it is likely to result in the finding that only marginal changes to the existing strategy are needed and that larger doses of the present policy will be sufficient to achieve the inflation target. This document was provided by Policy Department A at the request of the Economic and Monetary Affairs (ECON) Committee.
The Ecb S Money Pillar
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Author : Mr.Albert Jaeger
language : en
Publisher: International Monetary Fund
Release Date : 2003-04-01
The Ecb S Money Pillar written by Mr.Albert Jaeger and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-04-01 with Business & Economics categories.
This paper discusses the case for a money pillar in the European Central Bank's (ECB) monetary policy strategy. Time-series evidence for industrial countries based on frequency-domain and unobserved-components analysis suggests that money can play a useful role in gauging and constraining long-run risks to price stability. Moreover, the specter of asset price bubbles and some of the area's institutional features, which may impart considerable persistence to area-wide inflation, caution against shifting to conventional inflation targeting. But the time series evidence also seems to point to a relatively loose connection between variations in nominal money growth and inflation in the short to medium run. As a consequence, effective communication of the ECB's monetary policy decisions from the point of view of the present money pillar is likely to remain a challenging task.
Money In Monetary Policy Design Under Uncertainty
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Author : Günter Beck
language : en
Publisher:
Release Date : 2007
Money In Monetary Policy Design Under Uncertainty written by Günter Beck and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Interest rates categories.
The European Central Bank has assigned a special role to money in its two pillar strategy and has received much criticism for this decision. In this paper, we explore possible justifications. The case against including money in the central bank's interest rate rule is based on a standard model of the monetary transmission process that underlies many contributions to research onmonetary policy in the last two decades. Of course, if one allows for a direct effect of money on output or inflation as in the empirical "two-pillar" Phillips curves estimated in some recent contributions,it would be optimal to include a measure of (long-run) money growth in the rule. In this paper, we develop a justification for including money in the interest rate rule by allowing for imperfect knowledge regarding unobservables such as potential output and equilibrium interest rates. We formulate a novel characterization of ECB-style monetary cross-checking and showthat it can generate substantial stabilization benefits in the event of persistent policy misperceptions regarding potential output. Such misperceptions cause a bias in policy setting. We find that cross-checking and changing interest rates in response to sustained deviations of long-runmoney growth helps the central bank to overcome this bias. Our argument in favor of ECB-style cross-checking does not require direct effects of money on output or inflation.
Background Studies For The Ecb S Evaluation Of Its Monetary Policy Strategy
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Author : Otmar Issing
language : en
Publisher:
Release Date : 2003
Background Studies For The Ecb S Evaluation Of Its Monetary Policy Strategy written by Otmar Issing and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with Business & Economics categories.
The European Central Bank
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Author : D. Howarth
language : en
Publisher: Springer
Release Date : 2003-05-14
The European Central Bank written by D. Howarth and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-05-14 with Business & Economics categories.
David Howarth and Peter Loedel provide a theoretically inspired account of the creation, design and operation of the European Central Bank. Issues explored include the theoretical approaches to the ECB, the antecedents of European monetary authority, the different national perspectives on central bank independence, the complex organisation of the bank, the issues of accountability and the difficult first years of the ECB in operation.
Money In Monetary Policy Design Under Uncertainty
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Author : Günter W. Beck
language : en
Publisher:
Release Date : 2016
Money In Monetary Policy Design Under Uncertainty written by Günter W. Beck and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
The European Central Bank has assigned a special role to money in its two pillar strategy and has received much criticism for this decision. In this paper, we explore possible justifications. The case against including money in the central bank's interest rate rule is based on a standard model of the monetary transmission process that underlies many contributions to research on monetary policy in the last two decades. Of course, if one allows for a direct effect of money on output or inflation as in the empirical "two-pillar" Phillips curves estimated in some recent contributions, it would be optimal to include a measure of (long-run) money growth in the rule. In this paper, we develop a justification for including money in the interest rate rule by allowing for imperfect knowledge regarding unobservables such as potential output and equilibrium interest rates. We formulate a novel characterization of ECB-style monetary cross-checking and show that it can generate substantial stabilization benefits in the event of persistent policy misperceptions regarding potential output. Such misperceptions cause a bias in policy setting. We find that cross-checking and changing interest rates in response to sustained deviations of long-run money growth helps the central bank to overcome this bias. Our argument in favor of ECB-style cross-checking does not require direct effects of money on output or inflation.
International Convergence Of Capital Measurement And Capital Standards
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Author :
language : en
Publisher: Lulu.com
Release Date : 2004
International Convergence Of Capital Measurement And Capital Standards written by and has been published by Lulu.com this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Bank capital categories.
The European Central Bank
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Author : Jakob De Haan
language : en
Publisher: MIT Press
Release Date : 2005-04-15
The European Central Bank written by Jakob De Haan and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-04-15 with Business & Economics categories.
An examination of the debates on European Central Bank monetary policy, focusing on issues of transparency, credibility, and accountability and the effect of the ECB's decentralized structure. The adoption of the euro in 1999 by 11 member states of the European Union created a single currency area second in economic size only to the United States. The euro zone's monetary policy is now set by the European Central Bank (ECB) and its Governing Council rather than by individual national central banks. This CESifo volume examines issues that have arisen in the first years of ECB monetary policy and analyzes the effect that current ECB policy strategy and structures may have in the future. After a detailed description and assessment of ECB monetary policy making that focuses on such issues as price stability and the predictability of policy decisions, the book turns to two important issues faced by European central bankers: the transparency and credibility of decision making and the ECB's decentralized structure. After showing that transparency in decision making enhances credibility, the book discusses the ECB's efforts at openness, its political independence as guaranteed by law, and its ultimate accountability. The book then considers the effects of the decentralized ECB structure, focusing on business cycle synchronization, inflation differentials, and differences in monetary policy transmission in light of the enlargement of the monetary union. The book also discusses options for ECB institutional reforms, including centralization, vote weighting, and cross-border regional banks.
The Monetary Policy Strategy Of The Ecb Reconsidered
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Author : Jordi Galí
language : en
Publisher: Centre for Economic Policy Research
Release Date : 2004
The Monetary Policy Strategy Of The Ecb Reconsidered written by Jordi Galí and has been published by Centre for Economic Policy Research this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Eurozone categories.
As one of the world's key central banks, the European Central Bank comes under intense public scrutiny. Yet, its constituency is diverse, with different national traditions of central banking and varied views about the conduct of monetary policy. The ECB acts on behalf of all the members of EMU, but belongs to no particular member state. It is accountable to the European Parliament, which has only a very recent tradition of oversight of monetary policy. For these reasons, there is a need for a regular, rigorous, non-partisan and pan-European analysis of the options facing the ECB and the policies it pursues. Monitoring the European Central Bank addresses this need. Written by a team of distinguished academic economists known internationally for their work on macroeconomics and monetary policy, MECB produces a full report and an Update each year. The full report describes the issues faced by the ECB during the preceding year; assesses the policy choices that were made; and sets out the issues likely to arise during the coming year. The Update offers a follow-up to the main report, and is written in the light of the Bank's own annual report. 'Duisenberg record' and the recent review by the ECB of its monetary policy strategy. It finds that the ECB has failed to achieve its stated key objective of avoiding inflation in excess of 2 per cent. Tough rhetoric without delivery has been a strategic mistake. Actual inflation appears to be adrift due to inattentive policy. This could lead to a dangerous and costly-to-correct climb in the inflation rates, unless sufficient attention is paid soon to this issue by the ECB. The ECB should have used its review of the monetary policy strategy to admit this failure and to adjust its inflation target range upwards, bringing words in line with actual policy. It did not, and stresses continuity instead. Money still continues to play too prominent a role in the ECB's stated strategy. The report examines several of the arguments often given for a prominent role of money, and finds none of them convincing. Inflation at present and in the future should be the central focus of the ECB's analysis, not money growth rates. Deflation is a risk that is always present when inflation is low. The ECB should admit this rather than avoi