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Maximizing Price Stability in a Monetary Economy

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  • Warren Mosler
  • Damiano B. Silipo

Abstract

In this paper we analyze options for the European Central Bank (ECB) to achieve its single mandate of price stability. Viable options for price stability are described, analyzed, and tabulated with regard to both short- and long-term stability and volatility. We introduce an additional tool for promoting price stability and conclude that public purpose is best served by the selection of an alternative buffer stock policy that is directly managed by the ECB.

Suggested Citation

  • Warren Mosler & Damiano B. Silipo, 2016. "Maximizing Price Stability in a Monetary Economy," Economics Working Paper Archive wp_864, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_864
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    References listed on IDEAS

    as
    1. Warren Mosler, 1998. "Full Employment and Price Stability," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 20(2), pages 167-182, January.
    2. Alan B. Krueger & Judd Cramer & David Cho, 2014. "Are the Long-Term Unemployed on the Margins of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 229-299.
    3. Leonardo Gambacorta & Boris Hofmann & Gert Peersman, 2014. "The Effectiveness of Unconventional Monetary Policy at the Zero Lower Bound: A Cross‐Country Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(4), pages 615-642, June.
    4. Alan B. Krueger & Judd Cramer & David Cho, 2014. "Are the Long-Term Unemployed on the Margins of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 229-299.
    5. Kroft, Kory & Lange, Fabian & Notowidigdo, Matthew J., 2012. "Duration Dependence and Labor Market Conditions: Theory and Evidence from a Field Experiment," CLSSRN working papers clsrn_admin-2012-21, Vancouver School of Economics, revised 28 Sep 2012.
    6. Manfred Kremer, 2016. "Macroeconomic effects of financial stress and the role of monetary policy: a VAR analysis for the euro area," International Economics and Economic Policy, Springer, vol. 13(1), pages 105-138, January.
    7. Olivier J Blanchard & Giovanni Dell'Ariccia & Paolo Mauro, 2013. "Rethinking Macro Policy II; Getting Granular," IMF Staff Discussion Notes 13/003, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    European Central Bank; Monetary Policy Tools and Price Stability; Buffer Stock Policy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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