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EU and EMU Entry: A Monetary Policy Regime Change for Austria?

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Author Info
Ernest Gnan () (Oesterreichische Nationalbank)
Claudia Kwapil () (Oesterreichische Nationalbank)
Maria Terese Valderrama () (Oesterreichische Nationalbank)

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Abstract

Economic and Monetary Union (EMU) has changed the monetary policy regime applicable in Austria in many respects, but the stability orientation of Austrias monetary policy has been maintained. EMUs institutional framework and the actual monetary policymaking of the Eurosystem have secured Austrias legacy of monetary stability at the European level. Decision making at theOesterreichische Nationalbank (OeNB), which had been shaped by the system of social partnership, is now characterized by a greater degree of formal central bank independence. The assignment of various economic policy goals to specific policymakers or institutions, an approach Austria had already followed under the hard currency regime, was maintained under EMU. Like the hard currency policy, the Eurosystems monetary policy has a medium- to longterm orientation. EMU stabilized Austrias nominal effective exchange rate even more than the hard currency policy could. Therefore, low domestic inflation and wage moderation play an even more important role in maintaining price competitiveness than in the past. The stable real effective exchange rate bears witness to the success in achieving this up to now. Monetary Conditions Indices and Taylor rules suggest that the monetary policy framework has eased for Austria under EMU. EU and EMU entry may have changed various channels of the monetary policy transmission mechanism.

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Publisher Info
Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Monetary Policy and the Economy.

Volume (Year): (2005)
Issue (Month): 2 (August)
Pages: 53-68
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Handle: RePEc:onb:oenbmp:y:2005:i:2:b:4

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Related research
Keywords: EU; EMU; Monetary Policy; Austria;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Stephen G. Cecchetti, 1999. "Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism," NBER Working Papers 7151, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Hochreiter, Eduard & Winckler, Georg, 1995. "The advantages of tying Austria's hands: The success of the hard currency strategy," European Journal of Political Economy, Elsevier, vol. 11(1), pages 83-111, March. [Downloadable!] (restricted)
    Other versions:
  3. Heinz Handler, 2004. "From Hard Currency Policy to Monetary Union," Macroeconomics 0408008, EconWPA. [Downloadable!]
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  4. Gabe de Bondt, 2002. "Retail bank interest rate pass-through: new evidence at the Euro area level," Working Paper Series 136, European Central Bank. [Downloadable!]
  5. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, Oxford University Press, vol. 6(3), pages 353-98, September.
  6. Frederic S. Mishkin, 1996. "The Channels of Monetary Transmission: Lessons for Monetary Policy," NBER Working Papers 5464, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Rajan, Raghuram G & Zingales, Luigi, 2003. "Banks and Markets: the Changing Character of European Finance," CEPR Discussion Papers 3865, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Juergen Janger & Karin Wagner, 2004. "Sectoral Specialization in Austria and in the EU-15," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 37-54, July. [Downloadable!]
  9. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December. [Downloadable!] (restricted)
  10. Guger, Alois, 1998. "Economic Policy and Social Democracy: The Austrian Experience," Oxford Review of Economic Policy, Oxford University Press, vol. 14(1), pages 40-58, Spring.
  11. Stephen G. Cecchetti, 1995. "Distinguishing theories of the monetary transmission mechanism," Proceedings, Federal Reserve Bank of St. Louis, issue May, pages 83-97. [Downloadable!]
  12. Maria Teresa Valderrama, 2001. "Credit channel and investment behavior in Austria: a micro-econometric approach," Working Paper Series 108, European Central Bank. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Theodoros S. Papaspyrou, 2007. "Economic Policy in EMU: Community Framework and National Strategies – focus on Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 04, Hellenic Observatory, LSE. [Downloadable!]
  2. Josef Christl, 2006. "Regional currency arrangements: insights from Europe," International Economics and Economic Policy, Springer, vol. 3(3), pages 209-219, December. [Downloadable!] (restricted)
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