Money in monetary policy design under uncertainty: a formal characterization of ECB-style cross-checking
- 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 many contributions to research on monetary policy in the last two decades. In this paper, we develop a justification for including money in the interest rate rule by allowing for imperfect knowledge regarding unobservables such as potential output and equilibrium interest rates. We formulate a novel characterization of ECB-style monetary cross-checking and show that it can generate substantial stabilization benefits in the event of persistent policy misperceptions regarding potential output. JEL Classification: E32, E41, E43, E52, E58
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Version: 15 September 2006
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| Verfasserangaben: | Günter W. Beck, Volker WielandORCiDGND |
|---|---|
| URN: | urn:nbn:de:hebis:30-43991 |
| Titel des übergeordneten Werkes (Deutsch): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,18 |
| Schriftenreihe (Bandnummer): | CFS working paper series (2007, 18) |
| Dokumentart: | Arbeitspapier |
| Sprache: | Englisch |
| Jahr der Fertigstellung: | 2007 |
| Jahr der Erstveröffentlichung: | 2007 |
| Veröffentlichende Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Datum der Freischaltung: | 30.04.2007 |
| Freies Schlagwort / Tag: | European Central Bank; Phillips Curve; monetary policy; money; policy under uncertainty; quantity theory |
| GND-Schlagwort: | Europäische Zentralbank; Geldpolitik |
| Ausgabe / Heft: | Version: September 15, 2006 |
| Seitenzahl: | 13 |
| Bemerkung: | 1st version: August 26, 2006 ; This version: September 15, 2006 |
| HeBIS-PPN: | 187516642 |
| Institute: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
| DDC-Klassifikation: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Lizenz (Deutsch): |  Deutsches Urheberrecht |
