Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5057580 | Economics Letters | 2017 | 5 Pages |
Abstract
â¢Simple forecast-based reaction function matches ECB decisions quite well until 2014.â¢Forecasts of professional forecasters imply better fit than ECB staff forecasts.â¢Starting in 2014 ECB has eased policy more aggressively.â¢Indicates a “lower for longer” approach near zero interest rates.
Research has suggested that monetary policy acts asymmetrically near zero interest rates. We match past ECB decisions with a simple forecast-based reaction function. The policy easing that started in 2013 has led to a deviation indicating a “lower for longer” approach.
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Authors
Tilman Bletzinger, Volker Wieland,