##ps were always a possibility, so the probability of their use never went from 0 % to 100 %, even for the first lsap program. this suggests that event studies could lead to downwardly biased estimates of the impact of lsaps. in fact, if the announcement indicated that the program was smaller than expected, then bond yields could rise on the program ’ s announcement. this scenario could occur even though the overall program — including its anticipation — was effective in reducing yields. this makes interpreting the direction of changes in bond yields on the day of an announcement difficult. the second problem with event studies is that there are always other things going on. when the fed announces an lsap program, long - term rates might drop because of the announcement, or because market participants were revising downward their views about the state of the economy and the economic outlook in light of the fed ’ s actions. or, conversely, long - term yields could conceivably even rise as market participants became more confident that the policy actions would be sufficient to push the economy toward the central bank ’ s goals of maximum sustainable employment and price stability. the third problem with event studies is the difficulty in disentangling the various factors behind 2 / 3 bis central bankers'speeches the moves in long - term yields. if an open - ended lsap program pushes back the perceived timing of short - term rate hikes, it will be difficult to apportion the impact on long - term yields between lsaps and an expectation of a flatter path for short - term rates. these conclusions argue for putting less reliance on event studies to measure the impact of lsaps, rather than more. in this regard, i would advocate taking a different tack : rely more on an evaluation of bond term premia to assess the potential impact of lsaps. bond term premia currently are unusually low, and i suspect that lsap programs here and abroad have been an important factor. evaluating the factors that have been affecting bond term premia over time might be a good alternative way of estimating the impact of lsaps. to sum up, while the impact of lsaps on long - term bond yields is likely lower than what is implied by some of the event study literature, this does not mean that lsaps aren ’ t a useful tool when the fomc is constrained by the zero lower bound. lsaps can not only narrow bond term premia, but also

mr duisenberg gives some views from the european central bank on eu enlargement text of the zolotas lecture given by dr willem f duisenberg, president of the european central bank, held at the bank of greece, athens on 15 october 1999. * * * introduction ladies and gentlemen, let me begin by saying that it is a great honour to be invited here to speak to you on such a prestigious occasion. this is particularly so given governor zolotas ’ – or should i say professor zolotas ’ – stature as perhaps the most significant contributor to greek monetary history over the past few decades. indeed, during professor zolotas ’ time as governor of the bank of greece, a period which, as we are all aware, extended well beyond two decades, the achievements of monetary policy were certainly quite impressive. the greece of the early 1950s was certainly not the same as it is today. at that time the greek economy, suffering from large fiscal deficits and high inflation, was in urgent need of a stable currency. it is thus a great tribute to governor zolotas that, for many years following his arrival at the bank of greece, the monetary stability that had only just been achieved was both maintained and combined with a particularly rapid rate of economic growth. it is therefore not surprising that this period in greece ’ s economic history has so often been referred to as the “ golden era of the drachma ”. of course, times change, and with them the economic and monetary environment. this was certainly the case in the 1970s when, following the collapse of the bretton woods exchange rate system and the explosion of oil prices, monetary authorities around the world were faced with new and difficult challenges. in many countries, attempting to meet these challenges was accompanied by a move to flexible exchange rates. however, for the most part, we europeans attempted and eventually succeeded in treading a different path. this was also the case here, when, in the latter years of governor zolotas ’ time in charge at the bank of greece, exchange rate stability was sought by pegging the drachma to the us dollar. as we all know, at that time greece was not yet a member of the european community. but this was also soon to change. indeed, assisting in the successful preparation for membership of the european community is yet another notable contribution that governor zolotas made to greece ’ s economic history. since that time greece has continued to face challenges as a member of