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The effectiveness of monetary policy in a low interest rate environment

Banca d’Italia and SUERF Workshop

The effectiveness of monetary policy in a low interest rate environment

Monetary policies worldwide are currently facing a number of challenges, including how to deal with the low level of nominal and real interest rates, how to deal with a persistent undershooting of inflation targets, how to align inflation expectations with the inflation target, how to deal with a changing inflation formation process, and how to gauge changes in the transmission of monetary policy impulses to the economy and inflation. Where actually is the effective lower bound of interest rates? How to incorporate unconventional policy tools such as outright asset purchases and forward guidance in the measurement of the policy stance and in the assessment of remaining policy scope? What do equilibrium and policy rates close to the effective lower bound imply for optimal monetary policy strategies, including the definition of price stability or the inflation aim? How has the post-crisis monetary policy toolbox performed; how should it develop further in the future? These and other topics are currently also reflected upon in global central banks’ ongoing monetary policy strategy reviews. The workshop will address several of these issues, combining insights from cutting edge academic research and policy makers’ practical experiences.

Scientific committee:
Jakob De Haan, SUERF President
Ernest Gnan, OeNB and SUERF Secretary General
Giuseppe Grande, Banca d"Italia
Mario Pietrunti, Banca d"Italia
Stefano Siviero, Banca d"Italia
Frank Smets, ECB and SUERF Fellow

Format: Online Workshop

Date and Time
 
Wednesday, 18 November 2020 - 14:00-16:20 CET
Thursday, 19 November 2020 - 14:00-16:35 CET

Programme

Wednesday, 18 November 2020
14:00 Welcome address

Daniele Franco, Senior Deputy Governor, Bank of Italy

 
14:20 Keynote speech by Jordi Galí, CREI, Universitat Pompeu Fabra, Barcelona GSE
15:05 Session 1 - Strategy

Paper 1 - Hitting the Elusive Inflation Target
Leonardo Melosi, EUI, Chicago Fed, CEPR, (paper with Francesco Bianchi and Mathias Rottner)

Discussant:  Flora Budianto, Economist at the Monetary and Economic Department, BIS


Paper 2 - Expectations-Driven Liquidity Traps: Implications for Monetary and Fiscal Policy
Sebastian Schmidt, ECB, (paper with Taisuke Nakata)

Discussant:  Juan Passadore, Assistant Professor, EIEF

 
16:05 Q&A
16:15 Wrap up of the Day 1 and Close
Thursday, 19 November 2020
14:00 Welcome
14:05 Session 2: Structural Change/Transmission

Paper 3 - Corporate Leverage and Monetary Policy Effectiveness in the Euro Area
Martina Cecioni, Banca d’Italia, (paper with Simone Auer and Marco Bernardini)

Discussant:  Carlo Altavilla, Head of Section, European Central Bank


Paper 4 - Bank intermediation activity in a low interest rate environment
Leonardo Gambacorta, BIS, (paper with Michael Brei and Claudio Borio)

Discussant:  Luisa Corrado, Professor of Economics, University of Rome Tor Vergata

 
14:55 Q&A
15:15 Braek
15:20 Session 3: Tools/Instruments

Chair: Stefano Siviero, Director General for Economics, Statistics and Research, Bank of Italy


Paper 5 - Monetary policy options in a ‘low for long’ era
Richard Harrison, Bank of England, (paper with Martin Seneca and Matt Waldron)

Discussant:  Andreas Tischbirek, Assistant Professor of Economics, HEC Lausanne


Paper 6 - On the negatives of negative interest rates and the positives of exemption thresholds
Romina Ruprecht, University of Basel, (paper with Aleksander Berentsen, University of Basel and FRB St. Louis, and Hugo van Buggenum, Tilburg University)

Discussant:  Kilian Rieder, Research Economist at the Oesterreichische Nationalbank

 
16:20 Q&A
16:30 Wrap up of the Day 2 and Close


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