Does Money Matter in the ECB Strategy? New Evidence Based on ECB Communication
نویسندگان
چکیده
We examine the role of money in the policies of the ECB, using introductory statements of the ECB President at the monthly press conferences during 1999-2004. Over time, the relative amount of words devoted to the monetary analysis has decreased. Our analysis of indicators of the monetary policy stance suggests that developments in the monetary sector, while somewhat more important in the later half of the sample, only played a minor role most of the time. Our estimates of ECB interest rate decisions suggest that the ECB’s words (monetary-sector based policy intensions) are not an important determinant of its actions.
منابع مشابه
Does central bank communication really lead to better forecasts of policy decisions? New evidence based on a Taylor rule model for the ECB
Nowadays, it is widely believed that greater disclosure and clarity over policy may lead to greater predictability of central bank actions. We examine whether communication by the European Central Bank (ECB) adds information compared to the information provided by a Taylor rule model in which real time expected inflation and output growth are used. We use five indicators of ECB communication th...
متن کاملECB Monetary Policy: How well does the Taylor Rule describe it?
Over the last decade, the simple instrument policy rule developed by Taylor (1993) has become a popular tool for evaluating monetary policy of central banks. As an extensive empirical analysis of the ECB’s past behaviour still seems to be in its infancy, we estimate several instrument policy reaction functions for the ECB which might shed a light on actual monetary policy in the euro area in th...
متن کاملTalking Less and Moving the Market More: Is this the Recipe for Monetary Policy Effectiveness? Evidence from the ECB and the Fed
This paper examines and compares the communication strategies of the Federal Reserve and the European Central Bank, and their effectiveness. First, we do a comparative study exercise. We find that on monetary policy committee meeting days both the ECB and the Fed can move market rates using either monetary policy or news shocks. However, the response of the long-end of the American term structu...
متن کاملNo 11 , November 2010 ENHANCING MONETARY ANALYSIS
From the outset of Monetary Union, the ECB has assigned a “prominent role” to monetary analysis in its monetary policy strategy. This article describes a number of new tools for monetary analysis that have been developed on the basis of ECB research. It discusses how these tools are used to interpret monetary developments and ultimately to offer insights that support the conduct of monetary pol...
متن کاملThe Importance of the Wording of the ECB Carlo Rosa and Giovanni Verga
This paper analyses the ECB communication, focusing in particular on its transparency dimension. We posit that if the ECB is transparent about its future policy decisions, then we should be able to forecast fairly well its future interest rate setting behaviour. We find that the predicting ability of the European monetary authority’s words, is similar to the one implied by market-based measures...
متن کامل