The Monetary Policy of the European Central Bank

21 Pages Posted: 1 Jun 2007

See all articles by Paolo Surico

Paolo Surico

London Business School - Department of Economics; Centre for Economic Policy Research (CEPR)

Abstract

The first six years of ECB monetary policy are examined using a general framework that allows central bankers to weight differently positive and negative deviations of inflation, output and the interest rate from their reference values. The empirical analysis on synthetic euro-area data suggests that the objective of price stability is symmetric, whereas the objectives of real activity and interest-rate stabilizations are not. Output contractions imply larger policy responses than output expansions of the same size, while movements in the interest rate are larger when the level of the interest rate is relatively high. The hypothesis of M3 growth-rate targeting is rejected.

Suggested Citation

Surico, Paolo, The Monetary Policy of the European Central Bank. Scandinavian Journal of Economics, Vol. 109, No. 1, pp. 115-135, March 2007. Available at SSRN: https://ssrn.com/abstract=990132 or http://dx.doi.org/10.1111/j.1467-9442.2007.00485.x

Paolo Surico (Contact Author)

London Business School - Department of Economics ( email )

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HOME PAGE: http://sites.google.com/site/paolosurico

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://sites.google.com/site/paolosurico

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