Uncertainty and Monetary Policy in the Euro Area

Author (Person)	Blot, Christophe, Hubert, Paul, Labondance, Fabien
Author (Corporate)	European Parliament: DG Internal Policies
Publisher	European Parliament: European Parliamentary Research Service (EPRS), European Union
Series Title	EPRS In-Depth Analysis
Series Details	PE 658.196
Publication Date	November 2020
ISBN	978-92-846-7448-0
EC	QA-03-20-744-EN-N
Content Type	Research Paper
	Abstract: The outbreak of the COVID-19 crisis has triggered a new wave of uncertainty, which may amplify the negative effect of the crisis. Based on several uncertainty measures, we show that inflation in the euro area is negatively affected by higher uncertainty. However, uncertainty does not impair the transmission of monetary policy. Consequently, the ECB should consider uncertainty in its reaction function in order to fulfil its mandate. Further information: This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020. The analysis is part of the series Monetary Dialogue Papers.
Source Link	Link to Main Source https://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL_IDA(2020)658196 Alternative Source 1 Alternative sources https://www.europarl.europa.eu/RegData/etudes/IDAN/2020/658196/IPOL_IDA(2020)658196_EN.pdf
Subject Categories	Economic and Financial Affairs
Subject Tags	Monetary Affairs
International Organisations	European Union [EU]