IMF Working Papers

The ECB'S Money Pillar: An Assessment

By Albert Jaeger

April 1, 2003

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Albert Jaeger. The ECB'S Money Pillar: An Assessment, (USA: International Monetary Fund, 2003) accessed October 10, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Asset bubbles, Communications in revenue administration, Financial crises, Inflation, Inflation persistence, Inflation targeting, Monetary policy, Price stabilization, Prices

Keywords: Asset bubbles, Central bank, Central banks and their policies, Communication gap, ECB's communication, ECB-type definition, ECB-type definition of price stability, Executive board member, Inflation, Inflation objectives amount, Inflation persistence, Inflation rate, Inflation targeting, Longer-run inflation objective, Monetary policy, Money growth, Money pillar, Money stock, Policy stance, Policy strategy, Price stabilization, WP

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2003/082

  • Stock No:

    WPIEA0822003

  • ISBN:

    9781451850468

  • ISSN:

    1018-5941