Monetary policy

Integrating monetary policy and macroprudential regulation

Otaviano Canuto, Matheus Cavallari, 21 May 2013

The global financial crisis has shattered the confidence of many established principles of monetary policy and financial supervision. This column argues that the two should not remain separate, and maps out the major challenges faced by their complementary implementation.

Communication by the European Central Bank: Inconsistent, yet effective?

David-Jan Jansen, Jakob de Haan, 13 May 2013

The European Central Bank has often been criticised for inconsistencies in its policy communications. At the same time, several papers show how ECB communication has been effective. This column resolves this paradox by providing evidence showing that ECB introductory statements were, in fact, quite consistent over the first decade of its operations.

Rapid current-account rebalancing in the southern Eurozone

Raphael Auer, 7 May 2013

Recent data show that the current-account deficits of Greece, Italy, Spain, and Portugal have improved at a rapid pace and are actually close to being balanced. This column reviews recent research that shows this adjustment has been remarkably fast. Compared to mid-2008, these four nations have switched expenditures at a rate that is much higher than the typical rate observed during large rebalancing episodes. A key requirement for a return to a post-crisis Eurozone is thus on its way to being met.

Policy preferences of central bankers and the design of a monetary-policy committee

Sylvester Eijffinger, Ronald Mahieu, Louis Raes, 7 May 2013

Debate about who should be on central-bank committees has resurfaced in recent years. Is it better to appoint experienced central bankers, financiers, NGO workers or civil servants? This column argues that variations in voting patterns change with career background. Evidence suggests that if central banks want a wide range of policy preferences, then getting more academics on committees might be a reasonable strategy for better policy

Why do emerging markets liberalise capital-outflow controls? Fiscal versus net capital flow concerns

Joshua Aizenman, Gurnain Kaur Pasricha, 2 May 2013

Recent years have seen a return to the capital controls policy debate. Presenting new data, this column argues that liberalisation of capital-outflow controls can allow emerging-market economies to reduce net capital inflow pressures, but may cost emerging economies the fiscal revenues that external financial repression generates.