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Do euro area countries respond asymmetrically to the common monetary policy?

  • Matteo Barigozzi

    ()

    (London School of Economics and Political Science)

  • Antonio M. Conti

    ()

    (Bank of Italy)

  • Matteo Luciani

    ()

    (European Center for Advanced Research in Economics and Statistics, Universit� libre de Bruxelles)

We investigate the possible existence of asymmetries among Euro Area countries� reactions to the European Central Bank monetary policy. Our analysis is based on a Structural Dynamic Factor model estimated on a large panel of Euro Area quarterly variables. Although the introduction of the euro has changed the monetary transmission mechanism in the individual countries towards a more homogeneous response, we nevertheless find that differences remain between Northern and Southern Europe in terms of prices and unemployment. These results are the consequence of country specific structures, not of European Central Bank policies.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 923.

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Date of creation: Jul 2013
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Handle: RePEc:bdi:wptemi:td_923_13
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