THE SGP and the ECB an exercise in asymmetry
Using panel data for the Euro Area countries in the period since 1972 this paper explores, in the context of a small model of the E.U. economy, the degree to which macroeconomic policy has been asymmetric. It shows in particular that monetary policy has been much more responsive to threats that inflation would lie outside the price stability target than to equal sized shocks within the target zone. Similarly monetary policy has responded to threats of large positive and negative output gaps but has remained largely unresponsive to smaller divergences. It thus appears that the ECB and its predecessors have been avoiding ‘fine-tuning’ but have been aggressive in responding to substantial threats to macroeconomic stability. In the light of this finding one can reflect on the asymmetries in the Stability and Growth Pact (SGP) that imposes penalties on excessive budgetary deficits. This paper examines the sense of the SGP, as revised in March 2005, in light of these findings, and the role the ECB plays vis-à-vis these policies. In particular it considers the new provisions for behavior in 'good times' and improved governance.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 19 (2007)
Issue (Month): ()
|Contact details of provider:|| Postal: |
Phone: +1 212 284 8600
Web page: http://www.capco.com/Email:
When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:0855. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Springett)
If references are entirely missing, you can add them using this form.