Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152663
Authors: 
Surico, Paolo
Year of Publication: 
2003
Series/Report no.: 
ECB Working Paper 229
Abstract: 
The announced primary objective of the European Central Bank is price stability. While no restrictive reference is given to how the goal should be reached, such a mandate can be thought as a concern to stabilize some relevant macroeconomic aggregates. Accordingly, we frame ECB monetary policy in a general set up that allows policy makers to weight differently positive and negative deviations of inflation and output gaps. The empirical analysis on aggregated Euro area data indicates that ECB monetary policy can be characterized by a nonlinear policy rule. While the objective of price stability is symmetric, the one on real activity is not in that output contractions require larger policy responses. Moreover, the actual Euro interest rate highly commoves with the counterfactual rate that the Bundesbank would have followed if charged to set policy rates for the Euro area.
Subjects: 
(asymmetric) central bank policy preferences
Bundesbank counterfactual interest rate target
ECB monetary policy rule
JEL: 
E52
E58
Document Type: 
Working Paper

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