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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.

Suggested Citation

  • Heinz Gluck & Dieter Proske & John A. Tatom, 1992. "Monetary and exchange rate policy in Austria: an early example of policy coordination," Working Papers 1992-005, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:1992-005
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    References listed on IDEAS

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    2. Francesco Giavazzi & Marco Pagano, 1991. "The Advantage of Tying One's Hands: EMS Discipline and Central Bank Credibility," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 303-330, National Bureau of Economic Research, Inc.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Eduard Hochreiter & Adalbert Knöbl, 1991. "Exchange Rate Policy of Austria and Finland," WIFO Working Papers 43, WIFO.
    5. George A. Kahn, 1987. "International policy coordination in an interdependent world," Economic Review, Federal Reserve Bank of Kansas City, vol. 72(Mar), pages 14-32.
    6. 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.
    7. Persson, Torsten, 1988. "An introduction and a broad survey," European Economic Review, Elsevier, vol. 32(2-3), pages 519-532, March.
    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.
    9. 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 473-491, June.
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    Cited by:

    1. John A. Tatom, 1994. "Currency appreciation and \"deindustrialization\": a European perspective," Working Papers 1992-006, Federal Reserve Bank of St. Louis.
    2. John A. Tatom, 1992. "The P-star model and Austrian prices," Working Papers 1992-001, Federal Reserve Bank of St. Louis.
    3. Dieter Proske & John A. Tatom, 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.
    4. John A. Tatom, 1995. "Currency Appreciation and ‘Deindustrialisation’: A European Perspective," The World Economy, Wiley Blackwell, vol. 18(4), pages 519-541, July.

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    Keywords

    Austria; Monetary policy - Austria;

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