The ECB'S Money Pillar : An Assessment

Author/Editor:

Albert Jaeger

Publication Date:

April 1, 2003

Electronic Access:

Download PDF. Use the free Adobe Acrobat Reader to view this PDF file

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.

Series:

Working Paper No. 03/82

Subject:

English

Publication Date:

April 1, 2003

ISBN/ISSN:

9781451850468/1018-5941

Stock No:

WPIEA0822003

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

32

Please address any questions about this title to publications@imf.org