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Author Gerlach, Stefan ♦ Fagan, Gabriel ♦ Gerdesmeier, Dieter ♦ Henry, Jérôme ♦ Mestre, Ricardo
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Abstract This paper suggests a formal interpretation of the ECB’s two-pillar framework for monetary policy. I decompose inflation in the euro area into high- and low-frequency (or short-run and medium/long-run) components, which are correlated with monetary growth and the output gap, respectively. I propose and estimate a “two-pillar ” Phillips curve that assumes that money causes prices. While the model fits the data well and the causality assumption seems compatible with the 1980-1990 data, there appears to be reverse causality from prices to money in the 1991-2001 period, which would invalidate my proposed model.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article
Publisher Date 2002-01-01