Band 5, Heft 4

The adoption of a common currency by 12 European countries confronted monetary policy with unique challenges. In 1998, the ECB announced a monetary- policy strategy of how it aims to pursue price stability. Compared with other strategies, this has proved to be a superior alternative. Therefore, in the evaluation of its strategy in May 2003, the ECB confirmed that it aims to maintain inflation below, but close to, 2% over the medium term and that its decisions will continue to be based on a comprehensive analysis of risks to price stability, comprising an economic and a monetary analysis

I first review the background to the adoption of an inflation target in 1992 and the subsequent development of the regime, in particular the delegation of operational responsibility for monetary policy to the Bank of England in 1997 and the associated institutional framework. I then go on to explain some aspects of the way the MPC formulates and conducts policy at the Bank, relating it to some of the burgeoning literature on inflation targeting. I next review some aspects of performance since the Bank’s independence. I conclude with a discussion of the topical question of how monetary policy should respond to asset price booms and high rates of debt accumulation.

This article reconsiders the role of money in three dimensions of monetary policy: an empirical dimension concerning the link between money and macro-economic target variables, a theoretical dimension concerning the role of monetary aggregates in models of monetary policy, and a strategic dimension, concerning the use of monetary aggregate in the design and communication of monetary policy strategies. We review recent research and present empirical evidence for the euro area and other countries. We show that money growth is a reliable indicator of euro-area inflation in the medium and long run. In contrast, the usefulness of money to predict short-run inflation is small in times when inflation and money growth are both low and relatively stable. We show that, although the presentation of models of monetary macro-economics has changed, the role of money is still the same within these models. The strategic role of money changes over time: money moves to the foreground, when inflation is too high, and it stays in the background when inflation is low. Since there is little reason to believe that inflation will always be low in the euro area, we expect that money will regain importance in the ECB’s monetary policy strategy sooner or later.

The article deals with the economic policy concepts of three groups that opposed National Socialism: the so-called Freiburg (Eucken, Lampe, Dietze), the Goerdeler, and the Kreisau Circles (Moltke, Yorck). First, the personal relationships among the members of the circles and their relationship to the military resistance are highlighted, with special emphasis on Stauffenberg. Second, their liberal and conservative concepts and proposals and memoranda are discussed. Finally, the differences and similarities of the concepts of the groups are demarcated and the questions are posed whether they influenced post-war German economic policy and how far their ideas are still relevant today.