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The First Year of the Eurosystem: Inflation Targeting or Not?

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  • Lars E. O. Svensson

Abstract

This paper is a brief evaluation of the Eurosystem's monetary-policy regime after its first year, in particular of the extent to which it is similar to inflation targeting as practiced by an increasing number of central banks. I examine the Eurosystem's goals, framework for monetary-policy decisions and communication with outsiders. Criteria for evaluation are whether the goals are unambiguous and appropriate; whether the decision framework is efficient in collecting and processing information and reaching decisions that are appropriate relative to the goals; and whether the communication is effective in motivating decisions, simplifying external evaluation and thereby improving transparency and accountability. I also consider whether the actual instrument setting has been appropriate, given the information available at the times of decision.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 90 (2000)
Issue (Month): 2 (May)
Pages: 95-99

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Handle: RePEc:aea:aecrev:v:90:y:2000:i:2:p:95-99

Note: DOI: 10.1257/aer.90.2.95
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References

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  1. Persson, Torsten & Tabellini, Guido, 1999. "Political economics and macroeconomic policy," Handbook of Macroeconomics, Elsevier, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 22, pages 1397-1482 Elsevier.
  2. Agell, Jonas & Persson, Mats, 1997. "Tax Arbitrage and Labor Supply," Working Paper Series, Uppsala University, Department of Economics 1997:26, Uppsala University, Department of Economics.
  3. Lars E. O. Svensson, 1996. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," NBER Working Papers 5797, National Bureau of Economic Research, Inc.
  4. Faust, Jon & Svensson, Lars E O, 2002. "The Equilibrium Degree of Transparency and Control in Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 34(2), pages 520-39, May.
  5. Lars E.O. Svensson, 1999. "Monetary policy issues for the Eurosystem," Proceedings, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco.
  6. Svensson, Lars, 1999. "Does the P* Model provide Any Rationale for Monetary Targeting?," Seminar Papers, Stockholm University, Institute for International Economic Studies 671, Stockholm University, Institute for International Economic Studies.
  7. Hassler, J & Rodriguez Mora, J-V, 1997. "Employment Turnover and Unemployment Insurance," Papers, Stockholm - International Economic Studies 623, Stockholm - International Economic Studies.
  8. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(2), pages 300-323, April.
  9. Lars E. O. Svensson, 2000. "Open-Economy Inflation Targeting," NBER Working Papers 6545, National Bureau of Economic Research, Inc.
  10. Taylor, John B., 1998. "The Robustness and Efficiency of Monetary Policy Rules as Guidelines for Interest Rate Setting by the European Central Bank," Seminar Papers, Stockholm University, Institute for International Economic Studies 649, Stockholm University, Institute for International Economic Studies.
  11. Svensson, Lars E.O., 1997. "Inflation Targeting: Some Extensions," Seminar Papers, Stockholm University, Institute for International Economic Studies 625, Stockholm University, Institute for International Economic Studies.
  12. James E. Anderson, 1997. "Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs," NBER Working Papers 6181, National Bureau of Economic Research, Inc.
  13. Glenn D. Rudebusch & Lars E. O. Svensson, 1998. "Policy Rules for Inflation Targeting," NBER Working Papers 6512, National Bureau of Economic Research, Inc.
  14. Torsten Persson & Gerard Roland & Guido Tabellini, . "Comparative Politics and Public Finance," Working Papers 114, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  15. Svensson, Lars E O, 1999. "How Should Monetary Policy Be Conducted In An Era Of Price Stability?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2342, C.E.P.R. Discussion Papers.
  16. Acemoglu, Daron & Zilibotti, Fabrizio, 1999. " Information Accumulation in Development," Journal of Economic Growth, Springer, Springer, vol. 4(1), pages 5-38, March.
  17. Hassler, J. & Mora, J.V.R. & Storesletten, K. & Zilibotti, F., 1999. "Equilibrium Unemployment Insurance," Papers, Stockholm - International Economic Studies 665, Stockholm - International Economic Studies.
  18. Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labour Supply Prediction When Tax Avoidance Matters," Seminar Papers, Stockholm University, Institute for International Economic Studies 679, Stockholm University, Institute for International Economic Studies.
  19. Hassler, J. & Lindbeck, A., 1997. "Intergenerational Risk Sharing, Stability and Optimality of Alternative Pension Systems," Papers, Stockholm - International Economic Studies 631, Stockholm - International Economic Studies.
  20. Frederic S. Mishkin & Adam S. Posen, 1997. "Inflation targeting: lessons from four countries," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Aug, pages 9-110.
  21. Zenou, Yves, 1999. "Urban Unemployment and City Formation. Theory and Policy Implications," Seminar Papers, Stockholm University, Institute for International Economic Studies 662, Stockholm University, Institute for International Economic Studies.
  22. Hassler, John & Rodríguez Mora, José Vicente, 1998. "IQ, Social Mobility and Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1827, C.E.P.R. Discussion Papers.
  23. Acemoglu, Daron & Zilibotti, Fabrizio, 2000. "Productivity Differences," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2498, C.E.P.R. Discussion Papers.
  24. Svensson, Lars E O, 1998. "Inflation Targeting as a Monetary Policy Rule," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1998, C.E.P.R. Discussion Papers.
  25. Andrew K. Rose, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," NBER Working Papers 7432, National Bureau of Economic Research, Inc.
  26. Marimon, R. & Zilibotti, F., 1998. "Unemployment vs. Mismatch of Talents," Papers, Stockholm - International Economic Studies 661, Stockholm - International Economic Studies.
  27. Lars E.O. Svensson & Michael Woodford, 2004. "Implementing Optimal Policy through Inflation-Forecast Targeting," NBER Chapters, in: The Inflation-Targeting Debate, pages 19-92 National Bureau of Economic Research, Inc.
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