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Monetary policy and innovation in Europe: An SVAR approach

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  • Carvelli, Gianni
  • Bartoloni, Eleonora
  • Baussola, Maurizio

Abstract

Using quarterly data, we estimate the effects of monetary policy on innovation in the Eurozone over 2000–2021. Variations in the monetary stance may affect how firms and governments allocate resources to innovative investments. The identification of the structural shocks relies on an SVAR framework with a set of exclusion restrictions. Although characterised by the predominance of ZLB periods, conventional monetary policy shocks affect private and public R&D spending in the medium term with some initial inertia. Unconventional monetary shocks affect innovative expenditure in the short to medium term, but their impacts vanish in the longer run.

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  • Carvelli, Gianni & Bartoloni, Eleonora & Baussola, Maurizio, 2024. "Monetary policy and innovation in Europe: An SVAR approach," Finance Research Letters, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324007608
    DOI: 10.1016/j.frl.2024.105730
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    1. Ballabriga, Fernando & Davtyan, Karen, 2025. "Comparing conventional and unconventional monetary policy effects in the euro area and the United States," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 104(C).

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    Keywords

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    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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