Tracking business dynamism during the COVID-19 pandemic

Business dynamism is key for creative destruction and to foster resource reallocation – both crucial elements of long-run economic growth. This column uses a new data visualisation tool to reveal large sector- and country-level heterogeneity in the impact on business dynamism of the COVID-19 crisis in 2020 and in recovery. Initially, firm entry fell sharply in all countries, but the pace of recovery varied across countries. Bankruptcies fell and remained below pre-crisis levels well into 2021.

The Mussa puzzle and the optimal exchange rate policy

The Mussa puzzle refers to the existence of a large and sudden jump in the volatility of the real exchange rate after the adoption of a floating exchange rate regime in 1973. It is a central piece of evidence in favour of monetary non-neutrality. In contrast to conventional wisdom, this column argues that the puzzle cannot be explained with sticky prices, and instead provides strong evidence in favour of monetary transmission via the financial market. This has important consequences for the design of optimal monetary and exchange rate policy.

Views on monetary policy communication by former ECB policymakers

Central bank communication, like monetary policy itself, has evolved significantly since the global financial crisis. This column reports on a survey among former ECB policymakers on the ECB’s monetary policy communication, which provides broad support for recent innovations in communication practices and suggests that communication with expert audiences is generally adequate. Nevertheless, it highlights some room for improvement along several dimensions, in particular related to communication with the wider public.

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