The preferences of the euro area monetary policy-maker

• Type: Article in International Scientific Journal
• Date: 2005

Authors

Álvaro Aguiar (Author) FEP; Manuel Mota Freitas Martins (Author) FEP

Journal

Title: Journal of Common Market Studies

Vol. 43

Pages: 221-250

ISSN: 0021-9886

Publisher: Wiley-Blackwell

Indexing

ISI Web of Science

Scopus - 5 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-007-D72

DOI: 10.1111/j.0021-9886.2005.00553.x

Abstract (EN): The aim of this article is to uncover the aggregate monetary policy preferences in the euro area. This is pursued under the assumption of optimizing policy behaviour subject to a simple model of the macroeconomic structure, following a procedure proposed recently in the literature in which GMM estimation stems from the optimal control solution to the optimization problem. Instead of waiting for more quarterly data of ECB policy-making, the sample goes as far back as possible into the pre-EMU years. Through a combined analysis of facts, data and literature on European integration, 1995 is identified as the start date of a euro area notional policy regime, sustained later by the ECB. The policy preferences are estimated as a loss function with strict inflation targeting at 1.6 per cent and interest-rate smoothing, in the period 1995-2002. © Blackwell Publishing Ltd 2005.

Language: English

Type (Professor's evaluation): Scientific