The paper analyses the practical experience of monetary analysis at the ECB since its beginning. The analysis is based on both a narrative description of the internal briefing and a quantitative evaluation of the forecast exercise. We exploit a rich data basis containing the vintages of data and models over the period in order to evaluate the role of money in the input and the output of monetar...

This paper shows that monetary policy can have asymmetric effects in a matching model along the lines of D. Mortensen and C. Pissarides [1994. Job creation and job destruction in the theory of unemployment. Review of Economic Studies 61, 397–415]. when a balance sheet channel is at work. When a lender matches an entrepreneur, the investment project is financed and carried out. There is incomple...

There is no definition of globalization in a form universally accepted and perhaps not even final one. The reason is that globalization includes a multitude of complex processes, reaching different areas of society. It can be a phenomenon, an ideology, a strategy or all together. One thing is certain: globalization raises an endless polemic, progressing continuously and irreversibly generate ma...

This paper investigates the predictive ability of financial variables for euro area growth through bivariate and multivariate non-parametric Granger causality tests. Apart from assessing the within-country forecasting ability of commonly-employed financial variables, such as the term spread, the stock market returns and the growth of real money supply, we also test for cross-country influences....

This paper uncovers the Phillips curve trade-off perceived by U.S. monetary policymakers. For that purpose we use data on individual forecasts for unemployment and inflation submitted by each individual FOMC member, which was recently made available for the period 19921998. The results point to significant changes in the perceived trade-off over time with the Phillips curve flattening and the i...

This paper investigates changes in the conduct of U.S. monetary policy. Monetary policy is modeled in the context of the Bernanke-Mihov (1998) structural VAR (SVAR) extended to allow explicitly for the Fed’s forward looking behavior. This is achieved by including its realtime forecasts on in‡ation and unemployment (the “Greenbook” forecasts). Stability tests that exploit the SVAR identifying re...

The studies on Phillips curves relating the rate of unemployment to the rate of inflation are the results of the search for a reliable tool for forecasting inflation and implementing monetary policy. The original Phillips curve has attracted considerable attention and since then, it has undergone several important changes. Although the evidence of a negative relationship between the rate of cha...

In this comment, we answer the question posed in Svensson’s (2000) paper “Does the P* model provide any rationale for monetary targeting?” – in contrast to him – in the affirmative. We argue that a strategy of monetary targeting can be rationalised within the P* framework. Furthermore, we demonstrate that money growth targeting is a special form of inflation forecast targeting based on a ‘limit...

In this paper we present a two-country dynamic general equilibrium model of ex ante unequally developed countries. The model explains a key feature recently observed in transition economies, i.e. he long-run trend real exchange rate appreciation, through investments in quality. Our exchange rate projections bear important policy implications, which we illustrate on the conflict between the infl...

A key issue in monetary policymaking is the appropriate division of labor between the profes­ sional staff of the central bank and the appointed policymakers. Lars E. O. Svensson (1999) argues that the appropriate role of a policymaking group, such as the Federal Open Market Com­ mittee (FOMC) in the United States, is to make judgments about social welfare, taking as given the likely outcomes o...