The Impact of EMU on Inflation Expectations


Heinemann, Friedrich ; Ullrich, Katrin


[img]
Preview
PDF
ZEW18.pdf - Published

Download (407kB)

URL: http://ub-madoc.bib.uni-mannheim.de/129
URN: urn:nbn:de:bsz:180-madoc-1299
Document Type: Working paper
Year of publication: 2004
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: E31 E58 ,
Subject headings (SWD): Inflation
Abstract: This paper analyses the impact of the monetary regime change from the Bundesbank to the ECB in 1999 on inflation expectations. In the theoretical part, the Barro-Gordon model is used to derive the potential effect of a new central bank on inflation, inflation expectations and forecast errors. The econometric investigation is based on a flexible specification of expectation formation which allows both for rational and adaptive elements. Data on inflation expectations originate from the ZEW Financial Market Survey. The results indicate that the monetary regime change did not have a strong and lasting impact on the formation of inflation expectations and that the anti-inflationary credibility of both central banks is not perceived to differ significantly. However, the analysis also reveals that the years immediately before the start of EMU were characterised by a relatively large degree of uncertainty: in this time, market participants resorted to backward-looking expectations even more than usually. This is a plausible result because of the intitial uncertainty about the new central bank's characteristics. Once in charge of monetary policy the ECB was quickly successful to restore certainty about its true Bundesbank-like type.
Additional information:

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




+ Citation Example and Export

Heinemann, Friedrich ; Ullrich, Katrin (2004) The Impact of EMU on Inflation Expectations. Open Access [Working paper]
[img]
Preview


+ Search Authors in

+ Download Statistics

Downloads per month over past year

View more statistics



You have found an error? Please let us know about your desired correction here: E-Mail


Actions (login required)

Show item Show item