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How to normalize monetary policy in the Euro area

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  • Beck, Guenter W.
  • Wieland, Volker

Abstract

Since 2014 the ECB has implemented a massive expansion of monetary policy including large-scale asset purchases and negative policy rates. As the euro area economy has improved and inflation has risen, questions concerning the future normalization of monetary policy are starting to dominate the public debate. The study argues that the ECB should develop a strategy for policy normalization and communicate it very soon to prepare the ground for subsequent steps towards tightening. It provides analysis and makes proposals concerning key aspects of this strategy. The aim is to facilitate the emergence of expectations among market participants that are consistent with a smooth process of policy normalization.

Suggested Citation

  • Beck, Guenter W. & Wieland, Volker, 2017. "How to normalize monetary policy in the Euro area," IMFS Working Paper Series 115, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    • Handle: RePEc:zbw:imfswp:115
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    References listed on IDEAS

    as
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    Cited by:

    1. Battistini, Niccolò & Callegari, Giovanni & Zavalloni, Luca, 2019. "Dynamic fiscal limits and monetary-fiscal policy interactions," Working Paper Series 2268, European Central Bank.
    2. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2017. "Für eine zukunftsorientierte Wirtschaftspolitik. Jahresgutachten 2017/18 [Towards a Forward-Looking Economic Policy. Annual Report 2017/18]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201718.
    3. N. Hande SEVGİ, 2017. "Normalization of Monetary Policy After Global Crisis: What is Normalization?," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    4. Assenmacher, Katrin & Glöckler, Gabriel & Holton, Sarah & Trautmann, Peter & Ioannou, Demosthenes & Mee, Simon & Alonso, Conception & Argiri, Eleni & Arigoni, Filippo & Bakk-Simon, Klára & Bergbauer, , 2021. "Clear, consistent and engaging: ECB monetary policy communication in a changing world," Occasional Paper Series 274, European Central Bank.

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