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Monetary policy in Europe vs the US: what explains the difference?

  • Uhlig, Harald

This paper compares monetary policy in the US and EMU during the last decade, employing an estimated hybrid New Keynesian cash-in-advance model, driven by five shocks. It appears that the difference between the two monetary policies between 1998 and 2006 is due to both surprises in productivity as well as surprises in wage demands, moving interest rates in opposite directions in Europe and the US, but not due to a more sluggish response in Europe to the same shocks or to different monetary policy surprises.

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File URL: https://mpra.ub.uni-muenchen.de/14119/1/MPRA_paper_14119.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14119.

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Date of creation: 26 Jul 2007
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Handle: RePEc:pra:mprapa:14119
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  14. Schmitt-Grohé, Stephanie & Uribe, Martín, 2001. "Optimal Fiscal and Monetary Policy Under Sticky Prices," CEPR Discussion Papers 2942, C.E.P.R. Discussion Papers.
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  17. Jonas D. M. Fisher, 2006. "The Dynamic Effects of Neutral and Investment-Specific Technology Shocks," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 413-451, June.
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