Lessons from the ECB Experience: Frankfurt Still Matters!

23 Pages Posted: 9 Mar 2007

See all articles by Zeno Rotondi

Zeno Rotondi

UNICREDIT; LUISS Guido Carli University

Giacomo Vaciago

Catholic University of the Sacred Heart of Milan - Institute of Economy and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: March 5, 2007

Abstract

This paper compares the European Central Bank's conduct of monetary policy (1999-2005) with that of the Bundesbank (after the German Unification: 1990-1998) in order to test the hypothesis of an ECB with "Bundesbank's preferences" put forward in the theoretical literature (Alesina and Grilli 1993, Fatum 2006). Econometric tests and simulations based on monetary policy reaction functions show that the continuation of the former Bundesbank regime is supported by the data. Given this empirical evidence we discuss the lessons for future Monetary Unions stemming from the ECB experience.

Keywords: EMU, Monetary Policy, Reaction Function, Taylor rule, ECB, Bundesbank

JEL Classification: E52, E58

Suggested Citation

Rotondi, Zeno and Vaciago, Giacomo, Lessons from the ECB Experience: Frankfurt Still Matters! (March 5, 2007). Available at SSRN: https://ssrn.com/abstract=968699 or http://dx.doi.org/10.2139/ssrn.968699

Zeno Rotondi (Contact Author)

UNICREDIT ( email )

VIA SPECCHI 16
ROME, 00186
Italy

HOME PAGE: http://docenti.luiss.it/rotondi

LUISS Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Giacomo Vaciago

Catholic University of the Sacred Heart of Milan - Institute of Economy and Finance ( email )

Via Necchi 5
20123 Milano
Italy

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
58
Abstract Views
666
rank
451,943
PlumX Metrics