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Title: The European Central Bank: Decision Rules and Macroeconomic Performance

Author(s): Yunus Aksoy, Paul De Grauwe and Hans Dewachter

Publication Date: February 1999

Keyword(s): EMU, linear feedback rules and monetary stability

Programme Area(s): International Macroeconomics

Abstract: In this paper we analyse the effects of different decision rules in the ECB on monetary stability. We consider a model where asymmetric shocks and divergent propagation of shocks on output and inflation are potential causes of tensions within the ECB concerning the conduct of monetary (interest rate) policy. Given divergence of desired interest rates (due to the asymmetries) we analyse the effect of different voting procedures within the Governing Council of the ECB. Welfare implications are discussed.

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Bibliographic Reference

Aksoy, Y, De Grauwe, P and Dewachter, H. 1999. 'The European Central Bank: Decision Rules and Macroeconomic Performance'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2067