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Gianluigi Ferrucci

Monetary Policy


Monetary Policy Strategy

Current Position

Principal Economist

Fields of interest

Macroeconomics and Monetary Economics


Other current responsibilities

Principal Economist in DG-Monetary Policy

Professional experience

ECB, Senior economist, Monetary Policy Strategy Division


ECB, Senior economist, Euro Area External Sector & Euro Adoption Division


ECB, Senior economist, Monetary Policy Strategy Division


IMF, Advisor to the Permanent ECB Representative/IMF Observer


ECB, Senior economist, Monetary Policy Strategy Division


ECB, Senior economist, Euro Area Macroeconomic Developments Division


ECB, Economist, International Policy Analysis and Emerging Economies Division


Bank of England, Economist, International Economic Analysis Division


Bank of England, Economist, International Finance Division


San-Paolo-IMI, Financial analyst, Large Corporate Division

24 November 2021
Climate change has profound effects not only for societies and economies, but also for central banks’ ability to deliver price stability in the future. This paper starts by documenting why climate change matters for monetary policy: it impacts the economic variables relevant to setting the monetary policy stance, it interacts with fiscal and structural responses and it can generate dislocations in financial markets, which are impossible for monetary policy to ignore. Next, we survey several possible ways central banks can respond to climate change. These range from protective actions to more proactive measures aimed at mitigating climate change and supporting green finance and the transition to sustainable growth. We also discuss the constraints and trade-offs faced by central banks as they respond to climate risks. Finally, focusing on the specific challenges faced by inflation-targeting central banks, we consider how certain design features of this regime might interact with, and evolve in response to, the climate challenge.
JEL Code
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
21 September 2021
This paper analyses the implications of climate change for the conduct of monetary policy in the euro area. It first investigates macroeconomic and financial risks stemming from climate change and from policies aimed at climate mitigation and adaptation, as well as the regulatory and fiscal effects of reducing carbon emissions. In this context, it assesses the need to adapt macroeconomic models and the Eurosystem/ECB staff economic projections underlying the monetary policy decisions. It further considers the implications of climate change for the conduct of monetary policy, in particular the implications for the transmission of monetary policy, the natural rate of interest and the correct identification of shocks. Model simulations using the ECB’s New Area-Wide Model (NAWM) illustrate how the interactions of climate change, financial and fiscal fragilities could significantly restrict the ability of monetary policy to respond to standard business cycle fluctuations. The paper concludes with an analysis of a set of potential monetary policy measures to address climate risks, insofar as they are in line with the ECB’s mandate.
JEL Code
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
25 June 2018
Economic Bulletin Issue 4, 2018
Headline inflation can be noisy, blurring the signal on the medium-term inflationary pressure relevant for monetary policy. To help distinguish signal from noise in the data, central banks monitor measures of underlying inflation. As there are many ways of measuring underlying inflation, it is important to understand the properties of the various indicators and what factors may account for any divergence between them. This article describes in detail the measures of underlying inflation typically used at the ECB and evaluates them against a set of empirical criteria. Our results suggest that no one measure of underlying inflation is superior in all situations as the performance of the indicators varies over time. In practice, each indicator comes with merits and shortcomings, which calls for monitoring the full range of measures of underlying inflation.
JEL Code
C52 : Mathematical and Quantitative Methods→Econometric Modeling→Model Evaluation, Validation, and Selection
C82 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Methodology for Collecting, Estimating, and Organizing Macroeconomic Data, Data Access
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
9 December 2016
This paper investigates to what extent yield spreads on bonds issued by sub-sovereign entities within federations are driven by bailout expectations and investors
JEL Code
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
H7 : Public Economics→State and Local Government, Intergovernmental Relations
14 April 2010
In this paper we analyse the pass-through of a commodity price shock along the food price chain in the euro area. Unlike the existing literature, which mainly focuses on food commodity prices quoted in international markets, we use a novel database that accounts for the role of the Common Agricultural Policy in the European Union. We model several departures from the linear pass-through benchmark and compare alternative specifications with aggregate and disaggregate food data. Overall, when the appropriate dataset and methodology are used, it is possible to identify a significant and longlasting food price pass-through. The results of our regressions are applied to the strong increase in food prices in the 2007-08 period; a simple decomposition exercise shows that commodity prices are the main determinant of the increase in producer and consumer prices, thus solving the pass-through puzzle highlighted in the existing literature for the euro area.
JEL Code
C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
C53 : Mathematical and Quantitative Methods→Econometric Modeling→Forecasting and Prediction Methods, Simulation Methods
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
Q17 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Agriculture→Agriculture in International Trade
12 March 2008
This paper deals with two related issues: the sustainability of China's exchange rate regime and the opening up of its capital account. The exchange rate discussion deliberately passes over the issue of the “equilibrium” value of the renminbi and its alleged undervaluation - typically at the heart of the current policy debate - and focuses instead on the domestic costs of the current regime and the potential risks to domestic financial stability in the long run. The paper argues that the renminbi exchange rate should be increasingly determined by market forces and that administrative controls should be progressively relinquished. The exchange rate is obviously linked to well-functioning and efficient capital markets, which require no barriers to capital flows. Thus, exchange rate reform has to be correctly sequenced with reform of the capital account to avoid disruptive capital flows. The paper discusses China's twin surpluses of the current and capital accounts and attempts to identify the drivers of this “anomalous” external position. The pragmatic strategy pursued by the Chinese authorities in the aftermath of the Asian crisis encouraged FDI inflows and favoured the accumulation of a large stock of foreign exchange reserves. Combined with a relatively weak institutional setting, these factors have been important determinants of the pattern and composition of the country's capital flows and international investment position. Finally, the paper speculates on the outlook for Chinese capital flows should barriers to capital movements be lifted. It argues that whether China continues to supply capital to the rest of the world or eventually becomes a net borrower in international capital markets - as was the case for most of its recent history - will depend on the evolution of its institutions.
JEL Code
F10 : International Economics→Trade→General
F21 : International Economics→International Factor Movements and International Business→International Investment, Long-Term Capital Movements
F31 : International Economics→International Finance→Foreign Exchange
F32 : International Economics→International Finance→Current Account Adjustment, Short-Term Capital Movements
P48 : Economic Systems→Other Economic Systems→Political Economy, Legal Institutions, Property Rights, Natural Resources, Energy, Environment, Regional Studies
20 December 2007
In recent years there has been considerable variation in savings patterns across countries and regions, with implications for the configuration of global current account balances, asset valuations and real interest rates. This paper looks at the empirical drivers behind these trends. It uses a reduced-form model that relates private savings to a set of economic fundamentals, while controlling for structural and institutional differences across countries. Addressing a typical shortcoming of the previous literature, estimates are obtained from a dynamic model, which accounts for cross-sectional heterogeneity. The results suggest that saving rates in emerging economies are higher than cross-country estimates based on fundamentals, particularly in Asia. Demographic factors and financial catching-up have been key drivers of the observed changes in savings in these economies. Looking ahead, the prospective population aging is likely to lead to a considerable fall in saving rates in many economies - albeit the process will take decades to unfold. Further progress in financial deepening in developing economies may be conducive to a redistribution of international saving flows and may potentially support a smoother adjustment of global imbalances.
JEL Code
E20 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→General
E60 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→General
Journal of International Money and Finance, vol 79, pp. 72-98 (December 2017)
Determinants of sub-sovereign bond yield spreads – The role of fiscal fundamentals and federal bailout expectations
  • Roland Beck, Gianluigi Ferrucci, Arno Hantzsche and Matthias Rau-Göhring
International Journal of Central Banking, vol 8, No 1, pp 179-217 (March 2012)
Food price pass-through in the euro area: non-linearities and the role of the common agricultural policy
  • Gianluigi Ferrucci, Rebeca Jiménez-Rodríguez and Luca Onorante
Paper presented at the Conference by the Federal Reserve Bank of New York “Consumer Inflation Expectations”, (November 2010)
Consumers’ quantitative inflation perceptions and expectations in the euro area: an evaluation
  • Olivier Biau, Heinz Dieden, Gianluigi Ferrucci, Roberta Friz and Staffan Linden
In Vincenzo D’Apice and Giovanni Ferri (eds), Financial Instability: Toolkit for Interpreting Boom and Bust Cycles, Palgrave Macmillan Studies in Banking and Financial Institutions, (June 2010)
The output losses and fiscal costs of the financial crisis
  • Gianluigi Ferrucci
Journal of the European Economic Association, vol 3, No 2-3, pp 556-566, (April-May 2005)
Liquidity Risk and Contagion
  • Rodrigo Cifuentes, Gianluigi Ferrucci and Hyun Hong Shin
Bank of England Financial Stability Review (June 2004)
Understanding Capital Flows to Emerging Market Economies within a Push/Pull Framework
  • Gianluigi Ferrucci, Valerie Herzberg, Farouk Soussa and Ashley Taylor
Bank of England Working Paper, n. 205 (October 2003)
Empirical Determinants of Emerging Market Economies’ Sovereign Bond Spreads
  • Gianluigi Ferrucci
Bank of England Financial Stability Review (June 2003)
Assessing Sovereign Debt under Uncertainty
  • Gianluigi Ferrucci and Adrian Penalver