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The Simplest Test of Inflation Target Credibility

Svensson, Lars E O - C.E.P.R. Discussion Papers - 1994

A simple test of inflation target credibility is constructed by subtracting the maximum and minimum inflation rates consistent with the inflation targets from the yields to maturity on nominal bonds. This results in a target-consistent range of real yields on nominal bonds. If expected real...

Persistent link: https://www.econbiz.de/10005661572

Identification and Inference Using Event Studies

Gürkaynak, Refet S.; Wright, Jonathan - C.E.P.R. Discussion Papers - 2013

We discuss the use of event studies in macroeconomics and finance, arguing that many important macro-finance questions can only be answered using event studies with high-frequency financial market data. We provide a broad picture of the use of event studies, along with their limitations. As...

Persistent link: https://www.econbiz.de/10011084634

Macroprudential policy and central bank communication

Born, Benjamin; Ehrmann, Michael; Fratzscher, Marcel - C.E.P.R. Discussion Papers - 2010

supervision. Central bank communication will constitute a central policy tool for that purpose. The paper asks how such … communication will affect financial markets, exploiting the fact that many central banks have had some financial stability role in … times, but can have a substantially larger effect during periods of financial stress. Moreover, central bank communication …

Persistent link: https://www.econbiz.de/10008692311

Money in Monetary Policy Design: A Formal Characterization of ECB-Style Cross-Checking

Beck, Günter; Wieland, Volker - C.E.P.R. Discussion Papers - 2007

The European Central Bank has assigned a special role to money in its two pillar strategy and has received much criticism for this decision. 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...

Persistent link: https://www.econbiz.de/10005497931

Some Lessons from Six Years of Practical Inflation Targeting

Svensson, Lars E O - C.E.P.R. Discussion Papers - 2013

My lessons from six years of practical policy-making include (1) being clear about and not deviating from the mandate of flexible inflation targeting (price stability and the highest sustainable employment), including keeping average inflation over a longer period on target; (2) not adding...

Persistent link: https://www.econbiz.de/10011083489

Money in Monetary Policy Design under Uncertainty: The Two-Pillar Phillips Curve versus ECB-Style Cross-Checking

Beck, Günter; Wieland, Volker - C.E.P.R. Discussion Papers - 2007

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...

Persistent link: https://www.econbiz.de/10005792117

Why Does the Yield Curve Predict Economic Activity? Dissecting the Evidence for Germany and the United States

Smets, Frank; Tsatsaronis, Kostas - C.E.P.R. Discussion Papers - 1997

This paper investigates why the slope of the yield curve predicts future economic activity in Germany and the United States. A structural VAR is used to identify aggregate supply, aggregate demand, monetary policy and inflation scare shocks and to analyse their effects on the real, nominal and...

Persistent link: https://www.econbiz.de/10005123911

Should the Euro Area be Run as a Closed Economy?

Favero, Carlo A.; Giavazzi, Francesco - C.E.P.R. Discussion Papers - 2008

The European Economic and Monetary Union (EMU) has created a new economic area, larger and closer with respect to the rest of the world. Area-specific shocks are thus more important in EMU than country-specific shocks used to be in the previous states, e.g. in Germany. It is thus not surprising...

Persistent link: https://www.econbiz.de/10005136545

Money in monetary policy design: Monetary cross-checking in the New-Keynesian model

Beck, Günter; Wieland, Volker - C.E.P.R. Discussion Papers - 2009

In the New-Keynesian model, optimal interest rate policy under uncertainty is formulated without reference to monetary aggregates as long as certain standard assumptions on the distributions of unobservables are satisfied. The model has been criticized for failing to explain common trends in...

Persistent link: https://www.econbiz.de/10008577801

Politics and Monetary Policy

Ehrmann, Michael; Fratzscher, Marcel - C.E.P.R. Discussion Papers - 2010

How and why do politicians’ preferences about monetary policy differ from the interest rates set by independent central banks? Looking at the European Central Bank, the paper shows that politicians, on average, favor significantly lower interest rates. Three factors explain the different...

Persistent link: https://www.econbiz.de/10008784739