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The single monetary policy and domestic macro-fundamentals: Evidence from Spain

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  • Arghyrou, Michael G

    ()
    (Cardiff Business School)

  • Gadea, Maria Dolores

Abstract

We model pre-euro Spanish monetary policy and use our findings to assess the compatibility of the interest rates set by the ECB since 1999 with Spanish macrofundamentals. We find that in the 1990s Spain implemented successfully a monetary strategy tailored to its own domestic fundamentals; and by abolishing it to join the euro she has paid a cost in the form of a sub-optimal monetary policy. Spain.s experience suggests a cautious approach with regards to the timing of further EMU enlargement.

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Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2008/23.

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Length: 33 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:cdf:wpaper:2008/23

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Keywords: Spain; ECB; monetary policy; domestic fundamentals; compatibility;

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Cited by:
  1. Jürgen Jerger & Oke Röhe, 2009. "Testing for Parameter Stability in DSGE Models. The Cases of France, Germany and Spain," Working Papers, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) 276, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies), revised Mar 2011.
  2. Natividad Blasco & Pilar Corredor & Sandra Ferreruela, 2009. "Detecting intentional herding: what lies beneath intraday data in the spanish stock market," Documentos de Trabajo, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza dt2009-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.

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