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

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  • Michael G. Arghyrou

    (Cardiff Business School)

  • Maria Dolores Gadea

    (University of Zaragoza)

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 macro-fundamentals. 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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Bibliographic Info

Paper provided by Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza in its series Documentos de Trabajo with number dt2008-05.

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Date of creation: May 2008
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Handle: RePEc:zar:wpaper:dt2008-05

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

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References

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Cited by:
  1. Natividad Blasco & Pilar Corredor & Sandra Ferreruela, 2009. "Detecting intentional herding: what lies beneath intraday data in the spanish stock market," Documentos de Trabajo dt2009-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  2. Jerger, Jürgen & Röhe, Oke, 2011. "Testing for Parameter Stability in DSGE Models. The Cases of France, Germany and Spain," University of Regensburg Working Papers in Business, Economics and Management Information Systems 453, University of Regensburg, Department of Economics.

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