Discussion paper

DP2067 The European Central Bank: Decision Rules and Macroeconomic Performance

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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Citation

De Grauwe, P, H Dewachter and Y Aksoy (1999), ‘DP2067 The European Central Bank: Decision Rules and Macroeconomic Performance‘, CEPR Discussion Paper No. 2067. CEPR Press, Paris & London. https://cepr.org/publications/dp2067