The definition of price stability adopted by the ECB has recently been criticized in the literature, particularly for being unable to fully anchor inflation expectations and creating a deflation risk. In the paper empirical evidence is provided against these claims. Despite the unfavourable macroeconomic conditions for the euro area since 2001, monetary policy management has lead to the setting of the policy rate at levels compatible with trend inflation (the long-run inflation forecast) in the range 1-3%, and therefore without affecting negatively the inflation outlook.
Morana, C. (2006). The Price Stability Oriented Monetary Policy of the ECB: an Assessment. APPLIED ECONOMICS, 38(17), 2007-2020 [10.1080/00036840500427312].
The Price Stability Oriented Monetary Policy of the ECB: an Assessment
MORANA, CLAUDIO
2006
Abstract
The definition of price stability adopted by the ECB has recently been criticized in the literature, particularly for being unable to fully anchor inflation expectations and creating a deflation risk. In the paper empirical evidence is provided against these claims. Despite the unfavourable macroeconomic conditions for the euro area since 2001, monetary policy management has lead to the setting of the policy rate at levels compatible with trend inflation (the long-run inflation forecast) in the range 1-3%, and therefore without affecting negatively the inflation outlook.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.