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Monetary and Exchange Rate Policies of the Euro Area; Selected Issues

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  • International Monetary Fund

Abstract

This paper examines monetary and exchange rate policies of the euro area. The paper reviews the European Central Bank’s definition of price stability, and examines the factors determining “the optimal rate of inflation” in the euro area. It reviews the benefits of price stability, including the reduction in the distortions of savings and investment behavior that stem from the interaction between nominal tax systems and inflation. It then goes on to evaluate arguments for maintaining a small positive inflation rate in the context of the euro area.

Suggested Citation

  • International Monetary Fund, 2002. "Monetary and Exchange Rate Policies of the Euro Area; Selected Issues," IMF Staff Country Reports 02/236, International Monetary Fund.
  • Handle: RePEc:imf:imfscr:02/236
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=16145
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    References listed on IDEAS

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    1. Holston, Kathryn & Laubach, Thomas & Williams, John C., 2017. "Measuring the natural rate of interest: International trends and determinants," Journal of International Economics, Elsevier, vol. 108(S1), pages 59-75.
    2. Andrea Pescatori & Jarkko Turunen, 2015. "Lower for Longer; Neutral Rates in the United States," IMF Working Papers 15/135, International Monetary Fund.
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    Cited by:

    1. Kirsten Lommatzsch & Silke Tober, 2004. "The Inflation Target of the ECB: Does the Balassa-Samuelson Effect Matter?," EUI-RSCAS Working Papers 19, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).

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