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Abstract

This paper presents a complete set of results describing the effects of monetary policy in 10 countries of the Euro area for the pre-EMU period. For each country, we impose one of three identification schemes depending on its monetary integration with Germany, the nominal anchor of the ERM. The first identification scheme applies to Germany, the second to countries of the core EMS (Austria, Belgium and the Netherlands) and the third to all the other countries. An unexpected rise in the short-term interest rate leads to a decrease in GDP, (with investment and exports falling more than consumption) and a gradual decrease in prices for all countries. We also show that, given the width of the error bands around the estimate, we cannot reject that the effects of monetary policy on GDP and on prices are broadly similar in the individual countries of the Euro area. JEL Classification: E52.

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 092.

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Length: 49 pages
Date of creation: Dec 2001
Date of revision:
Handle: RePEc:ecb:ecbwps:20010092

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Related research

Keywords: Euro area countries; monetary policy; VARs.;

Find related papers by JEL classification:

• E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

References

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