Monetary Policy in EU

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9 Terms

1
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Quick Asymmetric Shock Data

  • differing growth rates

  • Differing inflation rates

  • differing house price inflation

2
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What did EU change its inflation target to

from max 2% to 2% +- a bit

3
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What problem to supply shocks cause

high inflation low output and so inflation targeting will further lower output

4
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What changed as a result of financial crises

financial stability must be considered due to the occurrence of asset bubbles

5
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De grawe two pillar strategy

  • target inflation 1st pillar

  • 2nd pillar bank credit asset prices

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ECB monetary policy instruments

  • open market operations

  • Minimum reserves

  • Standing facilities

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what are open market operations

interest rates and liquidity control

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What are standing lines

banks can deposit and borrow funds overnight to set interest rates

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What are minimum reserves

controls bank credit as banks can’t lend out as much (de grawe second pillar)