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In the euro area, monetary policy is conducted by a single central bank for 20 member countries. However, countries are heterogeneous in their economic development, including their inflation rates. This paper combines a New Keynesian model and a neural network to assess whether the European Central Bank (ECB) conducted monetary policy between 2002 and 2022 according to the weighted average of the inflation rates within the European Monetary Union (EMU) or reacted more strongly to the inflation rate developments of certain EMU countries.
The New Keynesian model first generates data which is used to train and evaluate several machine learning algorithms. They authors find that a neural network performs best out-of-sample. They use this algorithm to generally classify historical EMU data, and to determine the exact weight on the inflation rate of EMU members in each quarter of the past two decades. Their findings suggest disproportional emphasis of the ECB on the inflation rates of EMU members that exhibited high inflation rate volatility for the vast majority of the time frame considered (80%), with a median inflation weight of 67% on these countries. They show that these results stem from a tendency of the ECB to react more strongly to countries whose inflation rates exhibit greater deviations from their long-term trend.
In the recent past, we are making huge progress in the field of Artificial Intelligence. Since the rise of neural networks, astonishing new frontiers are continuously being discovered. The development is so fast that overall no major technical limits are in sight. Hence, digitization has expanded from the base of academia and industry to such an extent that it is prevalent in the politics, mass media and even popular arts. The DFG-funded project Specialized Information Service for Biodiversity Research and the BMBF-funded project Linked Open Tafsir can be placed exactly in that overall development. Both projects aim to build an intelligent, up-to-date, modern research infrastructure on biodiversity and theological studies for scholars researching in these respective fields of historical science. Starting from digitized German and Arabic historical literature containing so far unavailable valuable knowledge on biodiversity and theological studies, at its core, our dissertation targets to incorporate state-of-the-art Machine Learning methods for analyzing natural language texts of low-resource languages and enabling foundational Natural Language Processing tasks on them, such as Sentence Boundary Detection, Named Entity Recognition, and Topic Modeling. This ultimately leads to paving the way for new scientific discoveries in the historical disciplines of natural science and humanities. By enriching the landscape of historical low-resource languages with valuable annotation data, our work becomes part of the greater movement of digitizing the society, thus allowing people to focus on things which really matter in science and industry.