At the inception of economic and monetary union (EMU), an open question was whether execution of monetary policy by the Eurosystem could effectively stabilize liquidity and short-term interest rates. Potential problems could arise from the central bank’s limited knowledge of the new euro area...

Exchange rate intervention by monetary authorities should defend a band not for the spot exchange rate, but for a moving average of its recent values. This target zone is soft, in that it allows greater short-run flexibility, but also rigorous: it still precludes any sustained easing of monetary...

type="main" xml:lang="en" <title type="main">SUMMARY</title> </section> <title type="main">Disinflation deficits</title> <p> Persistently high expected inflation often makes it difficult for policy-makers to recover from inflationary episodes without substantial output losses. Using survey data from eleven disinflation episodes, we can assess whether the more...</p>