Banco de Portugal
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NBER Working Papers and Publications
|June 2013||Opting Out of the Great Inflation: German Monetary Policy after the Breakdown of Bretton Woods|
with Andreas Beyer, Christina Gerberding, Otmar Issing
in The Great Inflation: The Rebirth of Modern Central Banking, Michael D. Bordo and Athanasios Orphanides, editors
This chapter explains the monetary targeting framework followed by the German Bundesbank from 1974 to 1998, and relates the Bundesbank's success in maintaining price stability and in anchoring inflation expectations to its strategy. The goal is to provide a historical account of the conduct of monetary policy, focusing especially on the first ten years of monetary targeting, from 1975 until the middle of the 1980s, when price stability was virtually reached in Germany.
|December 2008||Opting Out of the Great Inflation: German Monetary Policy After the Break Down of Bretton Woods|
with Andreas Beyer, Christina Gerberding, Otmar Issing: w14596
During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the Bundesbank provided the role model for the European Central Bank. Hence, we examine an episode of lasting importance in European monetary history. The purpose of this paper is to highlight how the Bundesbank monetary policy strategy contributed to this success. We analyze the strategy as it was conceived, communicated and refined by the Bundesbank itself. We propose a theoretical framework (following Söderström, 2005) where monetary targeting is interpreted, first and foremost, as a commitment device. In ou...
|June 2006||Stability First: Reflections Inspired by Otmar Issing's Success as the ECB's Chief Economist|
with Anil K. Kashyap: w12277
In this paper, we review Otmar Issing's career as the ECB's inaugural chief economist and we document many notable successes. We try to infer some general principles that contributed to these successes and draw some lessons. In doing so, we review the evidence using Woodford%u2019s (2003) recent revival of the Wicksellian approach to monetary policy making. Suitably interpreted the baseline model can rationalize Issing%u2019s three guiding principles for successful policymaking. This baseline model, however, fails to account for the important role that monetary and financial analysis played in the conduct of policy during Issing%u2019s tenure. We propose an extension of the model to account for financial developments and show that this extended model substantially improves our understandin...
|March 2001||Home Bias in Portfolios and Taxation of Asset Income|
with Roger Gordon: w8193
Intuitively, the observed 'home bias' in individual portfolios plausibly explains the international capital immobility in aggregate data reported by Feldstein and Horioka (1980) as well as the survival of taxes on capital income. These intuitions are examined explicitly in a model where random consumer prices cause individuals to invest heavily in domestic equity as a hedge against these price fluctuations. Neither intuition is fully supported by the model. While the model forecasts that extra domestic savings generate extra investment primarily in the home country, consistent with the evidence in Feldstein and Horioka, this is true regardless of whether consumer price are random and so whether portfolios have 'home bias.' In addition, while random equity returns facilitate taxes on equi...
Published: Roger Gordon & Vitor Gaspar, 2001. "Home Bias in Portfolios and Taxation of Asset Income," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 1(advances/), pages 1001-1001.