The European Central Bank and the Federal Reserve

Authors

Stephen G. Cecchetti, The Ohio State University
Róisín O'Sullivan, Smith CollegeFollow

Document Type

Article

Publication Date

3-2003

Publication Title

Oxford Review of Economic Policy

Abstract

In the 4 years of its existence, the European Central Bank (ECB) has made significant contributions to the macroeconomic stability of the euro area. This paper takes a critical look at the ECB and compares its institutional structure, policy framework, and operational procedures with those of the longer-established US central bank. We discuss the implications of various differences between the ECB and the Federal Reserve with a view toward identifying successful elements of the practices of both these institutions. The paper recommends that the ECB abandon the first pillar of its monetary policy strategy that affords a special role to monetary aggregates in the evaluation of financial market conditions. It also suggests that the Federal Reserve should follow the ECB's lead and provide an explicit definition of price stability.

Volume

19

Issue

1

First Page

30

Last Page

43

DOI

doi.org/10.1093/oxrep/19.1.30

Rights

Copyright 2003, Oxford University Press

Comments

Archived as published.

Recommended Citation

Cecchetti, Stephen G. and O'Sullivan, Róisín, "The European Central Bank and the Federal Reserve" (2003). Economics: Faculty Publications, Smith College, Northampton, MA.
https://scholarworks.smith.edu/eco_facpubs/35