2003年-ECB欧洲央行_Background_Studies_for_the_ECBs_Evaluation_of_its_Monetary_Policy_Strategy_337页_1mb

ECB's Monetary Policy Strategy Evaluation Background Studies Summary

Core Content

The document presents a comprehensive overview of the background studies conducted by the European Central Bank (ECB) in preparation for the evaluation of its monetary policy strategy in May 2003. These studies were made available to the Governing Council to inform its strategic review and reflect on the effectiveness of the ECB's approach to maintaining price stability in the euro area.

Main Objectives of the ECB's Strategy

The ECB's primary objective, as defined by the Treaty establishing the European Community, is to maintain price stability in the euro area. The Governing Council, in October 1998, adopted a quantitative definition of price stability as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) below 2%, with a medium-term orientation.

Key Views and Arguments

1. Price Index Selection

• The ECB chose the headline HICP as the price index for its definition of price stability.
• This index is perceived as credible, reliable, and timely, and is harmonised across EU countries.
• Some critics argue that the ECB should focus on core inflation to avoid short-term price fluctuations, but this would not meet the necessary criteria for a robust price index.

2. Quantitative Value for Price Stability

• The 2% ceiling was chosen based on a broad consensus that low inflation is desirable and deflation is harmful.
• The decision to set this ceiling reflects a balance between the costs of inflation and the rationale for tolerating small positive inflation rates.

3. Costs of Inflation

• Inflation can lead to resource misallocation, inflation tax on real balances, income distribution effects, increased inflation uncertainty, and higher costs of changing prices.
• Recent studies suggest that even moderate inflation rates can have significant costs, making literal price stability (zero inflation) a strong case.

4. Rationales for Small Positive Inflation

• Measurement bias: The HICP may have a positive measurement error, meaning that zero inflation as measured could actually result in a declining price level.
• Downward nominal wage rigidity: This refers to the reluctance of wage setters to cut nominal wages, which could hinder economic adjustment at low inflation levels. However, the empirical evidence is uncertain, and some argue that this rigidity may decline in the future due to increased flexibility in wage and price-setting.
• Inflation differentials: Sustained differences in inflation rates across euro area countries can be caused by temporary and structural factors. Structural factors, such as the Balassa-Samuelson effect, are related to productivity differences between tradable and non-tradable sectors. These differentials are often equilibrium phenomena and do not necessarily require policy intervention.

The Two-Pillar Framework

The ECB's strategy is based on a two-pillar framework:

• Monetary pillar: Focuses on the growth of broad money aggregates (M3) and uses a reference value for monetary growth to assess price stability.
• Economic pillar: Involves a comprehensive analysis of a wide range of economic and financial indicators to evaluate price developments.

The two-pillar framework is designed to:

• Reflect the complexity and uncertainty in monetary policy.
• Allow for cross-checking of information from different analytical perspectives.
• Provide a diversified approach to assessing risks to price stability.

The Governing Council decided to discontinue the annual review of monetary growth reference values, as the long-term nature of the reference value is now more clearly defined.

Communication and Strategy Review

• The strategy review, announced on 8 May 2003, aimed to clarify and enhance the ECB's communication with the public.
• The Governing Council confirmed the quantitative definition of price stability, emphasizing that it aims to maintain inflation below, but close to, 2%.
• The strategy was praised for its transparency and credibility, with medium and long-term inflation expectations remaining well anchored since 1999.

Conclusion

The ECB's monetary policy strategy has been effective and tested over the years. It combines a clear focus on price stability with an open and transparent acknowledgment of economic uncertainty and the need for flexibility. The strategy also aims to avoid excessive policy activism and to promote stability in the economy through a diversified approach to assessing price developments.

The document serves as a comprehensive review of the technical studies and discussions that informed the ECB's strategy evaluation. It highlights the importance of communication, monetary analysis, and economic indicators in shaping the ECB's monetary policy decisions.