Zur Rolle der Geldpolitik im Konjunkturzyklus / On the Role of Monetary Policy in the Business Cycle: Eine empirische Analyse im Hinblick auf die Europäische Währungsunion / An Empirical Analysis Before the Outset of the European Monetary Union

From the outset of the European Monetary Union, the member countries will loose sovereignty in monetary policy. This may have negative effects on the economy if monetary policy has to play some role in national stabilization policy as long as the business cycles in the member countries are not fully correlated. In this article, the correlation between the national business cycles in the European Union is analyzed, using british, french, german and italian data. The results show that the correlation, especially between the french and the italian business fluctuations, has become somewhat closer in the last ten years. In the german data, on the other hand, there seems to be no tendency to a closer connection with the other european business cycles. In the following the real effects of monetary policy are analyzed. The cross-correlations between short-run interest rates and national GDPs show that the short-run interest rate, which is strongly influenced by monetary policy, is an inverted leading indicator in all four countries.