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The ECB Regional Bias in Targeting Inflation
Jönköping University, Jönköping International Business School, JIBS, Economics.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The aim of this paper is to find out whether monetary policy in the Euro Area from 1999 to 2014 has been targeting inflation with a bias towards some countries and to look for potential reasons for the existence of this bias. The paper presents a classification of regional biases according to the duration of the bias and to the objective of the policymaker. It then proceeds with an estimation of a forward-looking Taylor rule augmented by regional inflation deviations from the Euro Area average, over the 15-year period as well as in shorter intervals. The results indicate the existence of regional biases in each estimation and provide some indication about the nature of these biases. They also suggest that transparency can be increased by releasing information on when it is reasonable to pay more attention to some countries; additionally the Governing Council of the ECB may have deviated from the official objectives conducting sub-optimal monetary policy in the long-run, as there seems to be a small country bias.

Place, publisher, year, edition, pages
Keyword [en]
ECB, Regional bias, Central banking, Monetary policy, Euro Area
National Category
URN: urn:nbn:se:hj:diva-30594ISRN: JU-IHH-NAA-2-20160060OAI: diva2:938116
Subject / course
IHH, Economics
Available from: 2016-06-21 Created: 2016-06-16 Last updated: 2016-06-21Bibliographically approved

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