The Real Effects of Monetary Policy in the European Union: What Are the Differences?

Author/Editor:

Ramana Ramaswamy ; Torsten M Sloek

Publication Date:

December 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The main finding of this paper is that the European Union (EU) countries fall into two broad groups according to the effects of monetary policy adjustments on economic activity. Estimates based on a vector autoregression model indicate that the full effects of a contractionary monetary shock on output in one group of EU countries (Austria, Belgium, Finland, Germany, Netherlands, and United Kingdom) take roughly twice as long to occur, but are almost twice as deep as in the other group (Denmark, France, Italy, Portugal, Spain, and Sweden). The paper discusses the implications of these results for the effective conduct of monetary policy in the euro area.

Series:

Working Paper No. 1997/160

Subject:

Econometric analysis Financial services Monetary policy Monetary policy frameworks Monetary transmission mechanism Short term interest rates Vector autoregression

English

Publication Date:

December 1, 1997

ISBN/ISSN:

9781451857719/1018-5941

Stock No:

WPIEA1601997

Pages:

25

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