From Hard Currency Policy to Monetary Union
The paper elaborates on two successive monetary policy regimes in Austria: First, the economic and political background of the hard currency policy of the 1980s and 1990s, linking the schilling to the D- mark, is analysed. Second, the changeover in 1999 to EMU and its implications for Austria's economic policy strategy are evaluated. With regard to the critique that European monetary policy has neglected real sector developments and potential threats of deflation, it is maintained that the ECB had no other choice given the credibility gap at the start of EMU and the economic circumstances of the time, including the marked swings in the dollar value of the euro. There is, however, lack of transparency with regard to the monetary strategy which the ECB declines to be inflation targeting.
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