Will the Monetary Pillar Stay? A Few Lessons from the UK
AbstractThe ECB formulates its policy relying on two-pillars: the monetary pillar and alternative models of inflation. The two-pillars strategy has been seriously criticized and there is a chance that it will be reconsidered at some point in the future. This paper elaborates on this possibility, concentrating on the monetary pillar and drawing suggestions from the analysis of monetary policy in the UK. The choice of the UK is motivated by the fact that the Bank of England walked all the way from monetary targeting to the informational approach to money (and inflation targeting). As the ECB is currently threading the same path, and finding troubles on the way, the aim of the paper is to work out a map of the risks laying ahead, learning from the experience of someone who has been there before.
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Bibliographic InfoPaper provided by European University Institute in its series Economics Working Papers with number ECO2003/10.
Date of creation: 2003
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monetary policy; cointegration; demand for money;
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
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