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Monetary Policy Conditions in Spain Before and After the Changeover to the Euro: A Taylor Rule Based Assessment

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  • Bleich, Dirk
  • Fendel, Ralf

Abstract

This paper analyzes monetary policy conditions in Spain before and after the changeover to the Euro as the single European currency. We use forward-looking Taylor-type rules to describe the Banco de España's pre-Euro monetary policy and find that it was clearly inflation stabilizing. Compared to this we find that the monetary policy stance of the European Central Bank (ECB) since 1999 which was appropriate for the euro area as a whole was too expansionary for Spain's economy. The resulting cheap credit conditions for real estate must be seen as an important explanation for Spain's housing boom.

Suggested Citation

  • Bleich, Dirk & Fendel, Ralf, 2012. "Monetary Policy Conditions in Spain Before and After the Changeover to the Euro: A Taylor Rule Based Assessment," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 8(1), pages 1-17, February.
    • Handle: RePEc:ags:reapec:143463
    DOI: 10.22004/ag.econ.143463
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    Cited by:

    1. Dirk Bleich & Ralf Fendel & Jan-Christoph Rülke, 2013. "Monetary Policy and Stock Market Volatility," Economics Bulletin, AccessEcon, vol. 33(3), pages 1669-1680.
    2. Heryán, Tomáš & Tzeremes, Panayiotis G., 2017. "The bank lending channel of monetary policy in EU countries during the global financial crisis," Economic Modelling, Elsevier, vol. 67(C), pages 10-22.
    3. Tomáš Heryán & Panayiotis G. Tzeremes & Roman Matousek, 2016. "European lending channel: differences in transmission mechanisms due to the global financial crisis," Working Papers 0027, Silesian University, School of Business Administration.
    4. Tomáš Heryán & Iveta Palečková & Nemanja Radić, 2015. "Comparison of monetary policy effects on lending channel in EMU and non-EMU countries: Evidence from period 1999-2012," Working Papers 0003, Silesian University, School of Business Administration.

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