The transmission of monetary policy impulses in Belgium
AbstractThe first part of this article outlines the monetary policy transmission process. It pinpoints some special features of the Belgian economy, such as its high degree of openness, especially in relation to euro area partners, the high level of household financial assets, relatively weak dependence on bank lending at macroeconomic level, and the automatic indexation of wages. The macroeconomic simulations presented in the second part of the article show that, in Belgium as in the euro area, a monetary policy tightening tends to cause a temporary contraction in activity, due substantially to the decline in investment, and a slower but more persistent fall in prices. The euro appreciation normally caused by such a monetary policy shock amplifies its effects on activity, but above all accelerates its impact on prices. The reaction of the Belgian economy does not appear to be obviously different from that of the rest of the euro area. It seems to be slightly more moderate in volume, owing to the lower sensitivity of investment, and more rapid in terms of prices.
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Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2004)
Issue (Month): II (June)
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- Butzen, Paul & Fuss, Catherine & Vermeulen, Philip, 2001.
"The interest rate and credit channel in Belgium: an investigation with micro-level firm data,"
Working Paper Series
0107, European Central Bank.
- Paxil Butzen & Catherine Fuss & Philip Vermeulen, 2002. "The interest rate and crédit channels in Belgium: an investigation with micro-level firm data," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 45(3), pages 5-36.
- Paul Butzen & Catherine Fuss & Philip Vermeulen, 2001. "The interest rate and credit channels in Belgium: an investigation with micro-level firm data," Working Paper Research 18, National Bank of Belgium.
- Butzen, Paul & Fuss, Catherine & Vermeulen, Philip, 2001. "The interest rate and credit channels in Belgium: An investigation with micro-level firm data," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A3-1, International Conferences on Panel Data.
- V. Baugnet & M. Hradisky, 2004. "Determinants of Belgian bank lending intrest rates," Economic Review, National Bank of Belgium, issue III, pages 43-58, September.
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