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Disentangling the Monetary Policy Stance

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  • Filippo Gori

    (The Graduate Institute of International and Development Studies)

Abstract

This paper presents an account of the monetary policy stance for euro area countries from 1999 to the beginning of the crisis in 2008. The analysis starts with the derivation of a synthetic index measuring the average tightness of monetary policy across euro area members. The index is constructed using pseudo-Taylor residuals, obtained from an estimated monetary policy rule for the whole euro area and country speci c fundamentals. This measure is then decomposed to disentangle the role of in ation and fundamental economic dynamics. Results suggest that there were signi cant di erences in monetary policy stance across euro area members over the period considered. Such di erences are primarily driven by wedges in price dynamics, most of which are disconnected from real economic activity.

Suggested Citation

  • Filippo Gori, 2016. "Disentangling the Monetary Policy Stance," Bank of Lithuania Working Paper Series 27, Bank of Lithuania.
    • Handle: RePEc:lie:wpaper:27
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    References listed on IDEAS

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    Cited by:

    1. Rasa Stasiukynaite, 2017. "Understanding Monetary Policy Stance," Bank of Lithuania Occasional Paper Series 14, Bank of Lithuania.

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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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