Two Pillar Strategy

Two Pillar Strategy

The approach the European Central Bank uses to analyze price stability. The first pillar is economic analysis, which examines movements in business, unemployment and so forth. The second pillar is monetary analysis, which considers the supply and demand for money. The ECB checks these pillars against each other for confirmation of trends; this in turn influences its decisions.
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Oliver Bate, Chief Executive Officer Allianz SE, said: "Jay Ralph adeptly implemented the two pillar strategy in our asset management segment and will be missed after almost 20 years in the company.
Elements of a two pillar strategy - The basic development strategy that is presented remain the backbone of Bihar's economy in the near term.
RMSD for small-scale shocks, solvency off FR shocks UK Germany France Italy Spain Neths solvency off GBR 1.18 1.00 0.95 1.18 1.16 1.38 Output 1.47 1.75 1.50 1.28 1.67 1.50 Inflation 0.62 0.37 0.45 0.35 0.28 0.52 target 95% 1.06 1.35 1.44 1.07 1.09 0.73 target 99% 0.25 0.67 0.79 0.26 0.30 -0.21 FR shocks Belgium Portugal Austria Greece Ireland Finland solvency off GBR 1.72 1.55 1.12 1.27 1.44 1.51 Output 1.88 1.38 2.61 1.76 3.13 1.41 Inflation 0.33 0.32 0.27 0.33 0.38 0.31 target 95% 0.18 0.45 1.16 0.92 0.64 0.52 target 99% -0.98 -0.61 0.40 0.05 -0.34 -0.51 Notes: No Solvency Feedback, UK in EMU, Two Pillar Strategy in Place.
The two pillar strategy is a hybrid strategy which entails elements of monetary targeting and elements of inflation targeting.
It is clear from Duisenberg (1998), and elsewhere, that the ECB has adopted a two pillar strategy with a combination of money base targeting and inflation targeting and so in this paper we evaluate this rule against other rules nested within it.
The variability of the price level and inflation for the Euro Area are significantly lower under the combined nominal aggregate and inflation-targeting rule, or two pillar strategy, than under the other two rules.
The European Central Bank has a remit to maintain price level stability in the medium term, and it has developed a two pillar strategy, with interest rates being set in relation to a reference value of M3 and general (inflationary) conditions.
They conclude that the two pillar strategy adopted by the European Central Bank (ECB) is appropriate for European needs.