Monetary and Exchange Rate Policies of the Euro Area: Selected Issues
October 29, 2002
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This paper examines monetary and exchange rate policies of the euro area. The paper reviews the European Central Bank’s definition of price stability, and examines the factors determining “the optimal rate of inflation” in the euro area. It reviews the benefits of price stability, including the reduction in the distortions of savings and investment behavior that stem from the interaction between nominal tax systems and inflation. It then goes on to evaluate arguments for maintaining a small positive inflation rate in the context of the euro area.
Subject: Exchange rates, Foreign exchange, Inflation, Inflation targeting, International trade, Monetary policy, Price stabilization, Prices, Trade balance
Keywords: CR, Eastern Europe, ECB Policy announcement, Europe, exchange rate, Exchange rates, Global, Inflation, Inflation targeting, ISCR, monetary policy, price stability, Price stabilization, rate of inflation, real interest rate, Trade balance
Pages:
120
Volume:
2002
DOI:
Issue:
236
Series:
Country Report No. 2002/236
Stock No:
1EUREA0032002
ISBN:
9781451812985
ISSN:
1934-7685
