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The role of money and monetary policy in crisis periods: the Euro area case

  • Jonathan Benchimol

    (Economics Department - ESSEC Business School)

  • André Fourçans

    (Economics Department - ESSEC Business School)

In this paper, we test two models of the Eurozone, with a special emphasis on the role of money and monetary policy during crises. The role of separability between money and consumption is investigated further and we analyse the Euro area economy during three different crises: 1992, 2001 and 2007. We find that money has a rather signi ficant role to play in explaining output variations during crises whereas, at the same time, the role of monetary policy on output decreases significantly. Moreover, we find that a model with non-separability between consumption and money has better forecasting performance than a baseline separable model over crisis periods.

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Paper provided by HAL in its series Post-Print with number hal-00672806.

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Date of creation: 01 Feb 2012
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Handle: RePEc:hal:journl:hal-00672806
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