S/E/40. Investigating the European Central Bank's Monetary Policy

The present dissertation inquires into the nature and working of monetary policy of the ECB. Firstly, institutional framework of the ECBs monetary policy is analysed and found that the ECB follows certain aspects of inflation forecast targeting, but not all of them. Secondly, the dissertation presents a small closed economy new Keynesian model in order to investigate stability conditions of macroeconomic equilibria for IFB rules. Thirdly, two sets of interest rate reaction functions are estimated for the two sub-periods in order to conduct analysis of the ECBs monetary policy. Estimates show differences in the conduct of monetary policy over time.