Friday, March 17, 2006
ECB WATCH. A NEW ERA AT THE ECB?
. Ralph Atkins: "Missing Issing? How the loss of an ECB pivot will be felt", Financial Times
Ralph Atkins wonders whether the retirement of Ottmar Issing, due in May, will render the ECB's approach to monetary policy less Bundesbank-like (that is, less influenced by broad money supply measures like M3). Mr. Issing is the ECB's influential chief economist.
Already, Lucas Papademos, the former Greek central bank governor (who could well inherit Issing's position), is developing the concept of "output gaps" to help formulate policy. Says Atkins: "Mr. Issing regarded such ideas as too vague and dependent on unreliable data".
Also, there are signs that recent financial innovations are altering the links between money growth, the economy, and asset prices. This may undermine the value of M3 as a guide to monetary policy (*).
(*) The idea that globalization would render monetary indicators obsolete was put forward ten years ago by Manuel Johnson & Robert Keleher in their book Monetary Policy: A Market Price Approach. Westport: Quorum Books, 1996.
. Ralph Atkins: "Missing Issing? How the loss of an ECB pivot will be felt", Financial Times
Ralph Atkins wonders whether the retirement of Ottmar Issing, due in May, will render the ECB's approach to monetary policy less Bundesbank-like (that is, less influenced by broad money supply measures like M3). Mr. Issing is the ECB's influential chief economist.
Already, Lucas Papademos, the former Greek central bank governor (who could well inherit Issing's position), is developing the concept of "output gaps" to help formulate policy. Says Atkins: "Mr. Issing regarded such ideas as too vague and dependent on unreliable data".
Also, there are signs that recent financial innovations are altering the links between money growth, the economy, and asset prices. This may undermine the value of M3 as a guide to monetary policy (*).
(*) The idea that globalization would render monetary indicators obsolete was put forward ten years ago by Manuel Johnson & Robert Keleher in their book Monetary Policy: A Market Price Approach. Westport: Quorum Books, 1996.
# posted by Agustin @ 7:31 AM 
