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Is Monetary Policy in the Eurozone less Effective than in the US?

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  • Paul De Grauwe
  • Cláudia Costa Storti

Abstract

There is a wide consensus that the existence of structural rigidities in the Eurozone reduces the effectiveness of the ECB’s monetary policies. In order to test this “ECB-handicap” hypothesis, we perform a meta-analysis of the effects of monetary policies in the US and the Eurozone countries. This consists in collecting the estimated transmission coefficients obtained from published econometric studies. Meta-analysis then allows us to control for a number of factors that can affect these estimated coefficients. We conclude that there is no evidence for the hypothesis that the ECB is handicapped in using monetary policies for the purpose of stabilizing output compared to the US.

Suggested Citation

  • Paul De Grauwe & Cláudia Costa Storti, 2005. "Is Monetary Policy in the Eurozone less Effective than in the US?," CESifo Working Paper Series 1606, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1606
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1606.pdf
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    References listed on IDEAS

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    1. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
    2. Marvin Goodfriend & Robert G. King, 2001. "The Case for Price Stability," NBER Working Papers 8423, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Rafiq, M.S. & Mallick, S.K., 2008. "The effect of monetary policy on output in EMU3: A sign restriction approach," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1756-1791, December.
    2. repec:dau:papers:123456789/179 is not listed on IDEAS
    3. Frank A.G. den Butter & Mathieu L.L. Segers, 2014. "Prospects for an EMU between Federalism and Nationalism," Tinbergen Institute Discussion Papers 14-008/VI, Tinbergen Institute.
    4. repec:eme:jfeppp:jfep-07-2016-0051 is not listed on IDEAS
    5. Bonpasse, Morrison, 2007. "The Single Global Currency - Common Cents for the World (2007 Edition)," MPRA Paper 5879, University Library of Munich, Germany.

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