Theory and practice of monetary policy : based on the clarified and confirmed concept of the ECB

The treatise contributes to the ongoing debate on the definition and the ranking of price stability in context with targets of economic policy in market economies and reflects on the theoretical roots and on the role of monetary policy in a medium-term and a long-term oriented view. Referring to Milton Friedman's basic truths about inflationary processes, five main elements of a stability oriented monetary policy are derived and compared with the strategy of the European Central Bank (ECB) - especially with its liquidity management and the liquidity oriented refinancing tools of European monetary policy. In the first place it is shown that the strategy of the ECB, confirmed and clarified in May 2003, is still a policy of monetary control, but that the role of money is not as prominent as before and then referring to the Taylor-rule, that the ECB accommodates real economic developments. In the so called two pillar approach the economic analysis is now the pillar mentioned first, followed by the monetary analysis as second pillar. In this context the discussion on monetary targeting versus inflation targeting is judged as somewhat exaggerated. Being a potential future concept, components of a developed targeting are consi-dered, with its roots on the insight that inflation is a monetary phenomenon and that a monetary policy coping with empirical complexity should not be based too mechanically on inflation forecasts. Die Abhandlung ist ein Beitrag zur anhaltenden Debatte um Stellenwert und Definiti-on von Preisniveaustabilität im geld- und wirtschaftspolitischen Zielkatalog, sowie zur theoretischen Verankerung, zur Rolle und zur Praxis der Geldpolitik in Euroland. Sie baut auf der im Mai 2003 vom EZB-Rat veröffentlichten Überprüfung der geldpoliti-schen Strategie auf. Es wird herausgearbeitet, dass das Konzept mit seiner Reser-viertheit gegenüber einer aktivistischen Geldpolitik und mit der Überzeugung, dass Inflation ein monetäres Phänomen ist, weiterhin monetaristischen Einsichten nahe steht, die Rolle der Geldmenge aber nicht mehr so privilegiert ist wie zuvor