Measuring Monetary Policy Efficiency in European Union Countries: The Pre-EMU Years
Abstract
This paper proposes a method for measuring the contribution of an improved monetary policy to the changes in macroeconomic performance—identified with inflation and output stability. The technique used involves estimating actual and optimal policy rules as a function of the aggregate supply and demand shocks, with the purpose of examining how much of the change in performance can be accounted for by changes in the volatility of the aggregate shocks and how much can be ascribed to improvements in policy efficiency. A study of the changes in the macroeconomic performance of 14 European Union countries from the 1980s to the 1990s is undertaken here. The findings suggest that an improved monetary policy has played an important stabilization role in almost all European Union countries, while a diminished exposure to aggregate shocks has largely contributed towards improved performance in at least seven countries.Download Info
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Bibliographic Info
Article provided by IUP Publications in its journal The IUP Journal of Monetary Economics.
Volume (Year): V (2007)
Issue (Month): 1 (February)
Pages: 60-83
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Keywords:Other versions of this item:
- Stefan Krause, 2003. "Measuring Monetary Policy Efficiency in European Union Countries: The Pre-EMU years," Emory Economics 0311, Department of Economics, Emory University (Atlanta).
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Stephen G. Cecchetti & Alfonso Flores-Lagunes & Stefan Krause, 2006.
"Has Monetary Policy become more Efficient? a Cross-Country Analysis,"
Economic Journal,
Royal Economic Society, vol. 116(511), pages 408-433, 04.
- Stephen G. Cecchetti & Alfonso Flores-Lagunes & Stefan Krause, 2004. "Has Monetary Policy Become More Efficient? A Cross Country Analysis," NBER Working Papers 10973, National Bureau of Economic Research, Inc.
- Gerberding, Christina & Worms, Andreas & Seitz, Franz, 2004. "How the Bundesbank really conducted monetary policy: An analysis based on real-time data," Discussion Paper Series 1: Economic Studies 2004,25, Deutsche Bundesbank, Research Centre.
- Stephen G. Cecchetti & Stefan Krause, 2002. "Central bank structure, policy efficiency, and macroeconomic performance: exploring empirical relationships," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 47-60.
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