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Monetary and exchange rate policy in Austria: an early example of policy coordination

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  • Heinz Gluck
  • Dieter Proske
  • John A. Tatom

Abstract

This paper describes the evolution of Austrian exchange rate and monetary policy as an example of the benefits of policy coordination and credibility. This policy proved the performance of the Central Bank in achieving its twin objective of stabilizing the internal and external value of the currency. In this process, policymakers have sought to exploit the advantages of credibility by building a reputation for sticking to their policy. The evidence presented exhibits the increased coordination between Austrian and German nominal aggregates in the course of time. These accomplishments have apparently not tequired tying the real performance of the Austrian economy to any adverse permanent real consequences of German monetary policy, in particular, to its inflation-unemployment trade off.

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Bibliographic Info

Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1992-005.

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Date of creation: 1992
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Publication status: Published in Economic policy coordination in an integrating Europe (Bank of Finland, 1992)
Handle: RePEc:fip:fedlwp:1992-005

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Keywords: Austria ; Monetary policy - Austria;

References

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  1. Michael T. Belongia & K. Alec Chrystal, 1990. "The pitfalls of exchange rate targeting: a case study from the United Kingdom," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 15-24.
  2. Persson, Torsten, 1988. "An introduction and a broad survey," European Economic Review, Elsevier, vol. 32(2-3), pages 519-532, March.
  3. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  4. Clemens J.M. Kool & John A. Tatom, 1988. "International linkages in the term structure of interest rates," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 30-43.
  5. George A. Kahn, 1987. "International policy coordination in an interdependent world," Economic Review, Federal Reserve Bank of Kansas City, issue Mar, pages 14-32.
  6. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
  7. Giavazzi, Francesco & Pagano, Marco, 1988. "The advantage of tying one's hands : EMS discipline and Central Bank credibility," European Economic Review, Elsevier, vol. 32(5), pages 1055-1075, June.
  8. Rudiger Dornbusch, 1980. "Exchange Rate Economics: Where Do We Stand?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 11(1, Tenth ), pages 143-206.
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Cited by:
  1. John A. Tatom, 1995. "Currency Appreciation and ‘Deindustrialisation’: A European Perspective," The World Economy, Wiley Blackwell, vol. 18(4), pages 519-541, 07.
  2. John Tatom & Dieter Proske, 1994. "Are there adverse real effects from monetary policy coordination? Some evidence from Austria, Belgium and the Netherlands," Working Papers 1994-018, Federal Reserve Bank of St. Louis.
  3. John A. Tatom, 1992. "The P-star model and Austrian prices," Working Papers 1992-001, Federal Reserve Bank of St. Louis.

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