Weekly repo auctions are the European Central Bank's most important policy instrument. Provided that banks bid seriously, these auctions should reveal useful information about banks' liquidity needs and the stance of monetary policy. However 1 as we show in this paper, the applied auction rules...

We emphasize the importance of properly identifying the long-run relations underlying the monetary model of the exchange rate. The separate estimation of long-run money demands leads to a 'structural' error correction equation which allows an interpretation of the various channels affecting the...

The most important policy instruments of the Bundesbank and of the coming European Central Bank involve lending to domestic credit institutions. In this monetary setup, banks use short-term central bank credits extensively in order to refinance long-term loans to the public, which makes them...

A distinguishing feature of the ECB's monetary policy setup is the preannouncement of a minimum bid rate in its weekly repo auctions. However, whenever interest rates are expected to decline, the minimum bid rate is viewed as too high and banks refrain from bidding, severely impeding the ECB's...

In recent macroeconomic theory, relative price variability (RPV) generates the central distortions of inflation. This paper provides first evidence on the empirical relation between inflation and RPV in the euro area focusing on threshold effects of inflation. We find that expected inflation...

This paper investigates how the dynamic adjustment of the European overnight rate Eonia to the term spread and the ECB's policy rate has been affected by rate expectations and the operational framework of the ECB. In line with recent evidence found for the US and Japan, the reaction of the Eonia...

Although stable money demand functions are crucial for the monetary model of the exchange rate, empirical research on exchange rates and money demand is more or less disconnected. This paper tries to fill the gap for the Euro/Dollar exchange rate. We investigate whether monetary disequilibria...

The Eurosystem's main refinancing operations (MRO) are key for the interbank money market and the monetary transmission process in the euro area. This paper investigates how money market rates respond to the information revealed by various aspects of an MRO auction outcome. Our results confirm...

Diese Arbeit untersucht die empirische Relevanz des Monetären Modells fiir die Erklärung des DM / Dollar Wechselkurses. Dabei zeigt sich, daß der in der neueren empirischen Literatur übliche Testansatz (reduced form approach) zu unplausiblen Parameterrestriktionen und zu ineffizienten...

Die Frage nach der Steuerbarkeit der Geldmenge wird in empirischen Arbeiten üblicherweise auf die Frage nach der Vorhersagbarkeit von Geldangebotsmultiplikatoren reduziert. In dieser Arbeit wird untersucht, wie sinnvoll diese Herangehensweise bei der empirischen Untersuchung des...