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European Central Bank and monetary policy in the euro area

Author

Listed:
  • Vítor Gaspar
  • Otmar Issing

Abstract

Since 1 January 1999 the European Central Bank (ECB) has had sole responsibility for monetary policy in the euro area. Its main aim is to maintain price stability over the medium term. It is completely independent. The ECB has been successful in maintaining price stability and well-anchored inflation expectations. The euro is now a well-established international currency and a symbol of European integration. The financial and economic crises of 2007–2011 made the tension between the single monetary policy and national responsibilities for economic policies and financial stability visible. This is the main challenge going forward.

Suggested Citation

  • Vítor Gaspar & Otmar Issing, 2011. "European Central Bank and monetary policy in the euro area," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
  • Handle: RePEc:pal:dofeco:v:5:year:2011:doi:3846
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    File URL: http://www.dictionaryofeconomics.com/article?id=pde2011_M000429
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    Cited by:

    1. Alice Albonico & Alessia Paccagnini & Patrizio Tirelli, 2014. "Estimating a DSGE model with Limited Asset Market Participation for the Euro Area," Working Papers 286, University of Milano-Bicocca, Department of Economics, revised Nov 2014.

    More about this item

    Keywords

    euro; European Union; European Central Bank; monetary policy; price stability; expectations; credibility; finance;

    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
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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