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Industry Effects of Monetary Policy in Germany

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  • Bernd Hayo

    (ZEI & University of Bonn)

Abstract

This paper is on monetary policy transmission. First, it asks the question whether industries are affected differently by monetary policy shocks. Here both output and price effects are compared. Second, some industry characteristics are explored which may help to understand the existence of asymmetric effects. Third, since industries are regionally clustered, possible regional effects are being discussed as well. The analysis takes place within a VAR framework, and monthly data on West- German industries and are being employed. The results indicate that about one half of German industries show significantly different reactions compared to the aggregate. These differences can be partially explained by varying capital-output-ratios, export-orientation and subsidies. Finally it is likely, at least in the case of the German Länder, that asymmetric regional effects of monetary policy shocks will occur.

Suggested Citation

  • Bernd Hayo, 1999. "Industry Effects of Monetary Policy in Germany," Macroeconomics 9906009, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9906009 Note: Type of Document - PDF; prepared on IBM PC ; pages: 30; figures: included
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    Cited by:

    1. Martina Lawless, 2010. "Geography and firm exports: new evidence on the nature of sunk costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 691-707.
    2. Verónica Mies & Felipe Morandé & Matías Tapia, 2002. "Política Monetaria y Mecanismos de Transmisión: Nuevos Elementos para una Vieja Discusión," Working Papers Central Bank of Chile 181, Central Bank of Chile.
    3. Saibal Ghosh, 2009. "Industry Effects of Monetary Policy: Evidence from India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 44(1), pages 89-105, July.
    4. Llaudes, Ricardo, 2007. "Monetary policy shocks in a two-sector open economy: an empirical study," Working Paper Series 799, European Central Bank.
    5. Don Bredin & Stuart Hyde & Dirk Nitzsche & Gerard O'Reilly, 2009. "European monetary policy surprises: the aggregate and sectoral stock market response," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 14(2), pages 156-171.
    6. Gert Peersman & Frank Smets, 2005. "The Industry Effects of Monetary Policy in the Euro Area," Economic Journal, Royal Economic Society, vol. 115(503), pages 319-342, April.
    7. Casella, A., 2000. "Games for Central Bankers, Markets v/s Politics in Public Policy Decisions," G.R.E.Q.A.M. 00a02, Universite Aix-Marseille III.
    8. Georgiadis, Georgios, 2014. "Towards an explanation of cross-country asymmetries in monetary transmission," Journal of Macroeconomics, Elsevier, pages 66-84.
    9. Dedola, Luca & Lippi, Francesco, 2005. "The monetary transmission mechanism: Evidence from the industries of five OECD countries," European Economic Review, Elsevier, pages 1543-1569.
    10. Muhammad Jamil & Muhammad Irfan, 2016. "Monetary Policy, Business Cycles and Sectoral Response in Pakistan," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, pages 171-190.
    11. Tasneem Alam & Muhammad Waheed, 2006. "Sectoral Effects of Monetary Policy: Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1103-1115.
    12. Andreas Worms, 2003. "Interbank Relationships and the Credit Channel in Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(2), pages 179-198, June.
    13. Gábor Pellényi, 2012. "The Sectoral Effects of Monetary Policy in Hungary: A Structural Factor Analysis," MNB Working Papers 2012/1, Magyar Nemzeti Bank (Central Bank of Hungary).
    14. Sylvester Eijffinger & Ronald Mahieu & Louis Raes, 2017. "Can the Fed Talk the Hind Legs Off the Stock Market?," International Journal of Central Banking, International Journal of Central Banking, vol. 13(1), pages 53-94, February.
    15. Verónica Mies M. & Felipe Morandé L. & Matías Tapia G., 2002. "Monetary Policy and Transmission Mechanisms: New Elements for an old Debate," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 5(3), pages 29-66, December.
    16. Jean Farès & Gabriel Srour, 2001. "The Monetary Transmission Mechanism at the Sectoral Level," Staff Working Papers 01-27, Bank of Canada.
    17. Héctor F. Bravo & Carlos J. García & Verónica Mies & Matías Tapia, 2003. "Heterogeneity in Monetary Transmission: Sectoral and Regional Effects," Working Papers Central Bank of Chile 235, Central Bank of Chile.
    18. Worms, Andreas, 2001. "The reaction of bank lending to monetary policy measures in Germany," Working Paper Series 0096, European Central Bank.
    19. Michael Fratantoni & Scott Schuh, 2000. "Monetary policy, housing investment, and heterogeneous regional markets," Working Papers 00-1, Federal Reserve Bank of Boston.

    More about this item

    Keywords

    monetary policy; monetary transmission; industry effects; VAR; regional effects; Germany;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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