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The industry effects of monetary policy and their welfare implications

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Author Info

  • Ivo J.M. Arnold

    (Universiteit Nyenrode, Breukelen (The Netherlands))

Abstract

Economic theory provides at least two explanations for differential regional effects of a common monetary policy. The traditional money view focuses on regional differences in industry mix. Alternatively, the more recent credit view emphasizes differences in financial structure. This paper aims to make two contributions. First, building on the work by Carlino and DeFina (1998), I estimate impulse responses of sector earnings to monetary policy shocks for regions of the United States. An analysis of variance shows that the sector effect dominates the regional effect, providing further evidence for the importance of the industry mix. Second, the paper addresses the welfare implications of industry effects of monetary policy. One would expect industries suffering disproportionately from the impact of monetarypolicy to compensate their employees and shareholders. The US evidence on compensating wage and return differentials is, however, mixed.

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File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9921/9803
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Bibliographic Info

Article provided by Banca Nazionale del Lavoro in its journal Banca Nazionale del Lavoro Quarterly Review.

Volume (Year): 53 (2013)
Issue (Month): 214 ()
Pages: 287-315

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Handle: RePEc:psl:bnlqrr:2000:34

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Keywords: Monetary Policy; Monetary; Money; Policy;

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References

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  1. Maclennan, Duncan & Muellbauer, John & Stephens, Mark, 1998. "Asymmetries in Housing and Financial Market Institutions and EMU," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 54-80, Autumn.
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  3. Anil K. Kashyap & Jeremy C. Stein, 1997. "The role of banks in monetary policy: a survey with implications for the European Monetary Union," Economic Perspectives, Federal Reserve Bank of Chicago, issue Sep, pages 2-18.
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  29. repec:fth:eeccco:132 is not listed on IDEAS
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Cited by:
  1. Yamashiro, Guy & Grobar, Lisa, 2005. "Macroeconomic Shocks and Regional Employment: The Case of Southern California," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 35(2).

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