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An EMU with Different Transmission Mechanisms

Author

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  • Giovannetti, Giorgia
  • Marimon, Ramon

Abstract

We develop and compute a dynamic equilibrium model where economies differ on the relative efficiency of financial intermediaries and, therefore on households portfolios and currency holdings. Our model economies have some of the features of the different financial structures in countries of the European Union and respond to monetary shocks in a way similar to the observed responses, which we also estimate. It follows that if differences on the relative efficiency of financial intermediaries persist in a monetary union, conflicts of interests in the pursuit of a common monetary policy can arise.

Suggested Citation

  • Giovannetti, Giorgia & Marimon, Ramon, 1998. "An EMU with Different Transmission Mechanisms," CEPR Discussion Papers 2016, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2016
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    References listed on IDEAS

    as
    1. Fernando Barran & Virginie Coudert & Benoît Mojon, 1996. "The Transmission of Monetary Policy in the European Countries," Working Papers 1996-03, CEPII research center.
    2. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    3. Bagliano, Fabio C. & Favero, Carlo A., 1998. "Measuring monetary policy with VAR models: An evaluation," European Economic Review, Elsevier, vol. 42(6), pages 1069-1112, June.
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    Citations

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    Cited by:

    1. Agénor, Pierre-Richard & Aizenman, Joshua, 2011. "Capital market imperfections and the theory of optimum currency areas," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1659-1675.
    2. Ester Faia, 2007. "Financial Differences and Business Cycle Co‐Movements in a Currency Area," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 151-185, February.
    3. Maria Caporale, Guglielmo & M. Soliman, Alaa, 2009. "The Asymmetric Effects of a Common Monetary Policy in Europe," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 455-475.
    4. Matteo Ciccarelli & Alessandro Rebucci, 2001. "The Transmission Mechanism of European Monetary Policy: Is There Heterogeneity? Is It Changing Over Time?," Working Papers 0115, Banco de España.
    5. Alexis Penot, 2002. "Appréciations et conséquences possibles de l'hétérogénéité structurelle de la zone euro," Revue d'Économie Financière, Programme National Persée, vol. 65(1), pages 153-175.
    6. Nuno Alves, 2003. "The Distribution of Liquidity in a Monetary Union with Different Portfolio Rigidities," Working Papers w200306, Banco de Portugal, Economics and Research Department.
    7. Kuppers, Markus, 2001. "Curtailing the black box: German banking groups in the transmission of monetary policy," European Economic Review, Elsevier, vol. 45(10), pages 1907-1930, December.
    8. Alves, Nuno, 2008. "The mechanics of a monetary union with segmented financial markets," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 346-368, March.

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    More about this item

    Keywords

    ECB; limited participation; Monetary Policy; Transmission Mechanisms;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F30 - International Economics - - International Finance - - - General
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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