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Monetary policy implementation and transmission in the European Monetary Union

Identifieur interne : 007949 ( Istex/Corpus ); précédent : 007948; suivant : 007950

Monetary policy implementation and transmission in the European Monetary Union

Auteurs : Ilian Mihov

Source :

RBID : ISTEX:F5303610F3A02B8A28EA787F9E8941B4D5928B49

English descriptors

Abstract

I discuss possible problems engendered by loss of national monetary policies, and study them from three empirical perspectives. First, are business cycles sufficiently synchronized across EMU member countries? The evidence suggests that economic activity in those countries has become increasingly correlated in the 1990s, and that policy co–ordination has played a role in generating that outcome. Second, are there asymmetries in the mechanisms through which policy affects economic activity? The paper documents that policy transmission was indeed heterogeneous in the member countries, and that structural and financial factors were sensibly related to cross–country differences in the response of output to a monetary policy shock. Third, how is policy implemented in an environment of diverse business cycle fundamentals and transmission mechanisms? Estimation of monetary policy reaction functions finds that the European Central Bank is closer to an aggregate of the central banks in Germany, France, and Italy than to the Bundesbank alone.

Url:
DOI: 10.1111/1468-0327.00079

Links to Exploration step

ISTEX:F5303610F3A02B8A28EA787F9E8941B4D5928B49

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<title>Monetary policy implementation and transmission in the European Monetary Union</title>
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<title>Monetary policy implementation and transmission in the European Monetary Union</title>
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<name type="personal">
<namePart type="given">Ilian</namePart>
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<affiliation>INSEAD, Fontainebleau</affiliation>
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<dateIssued encoding="w3cdtf">2001-10</dateIssued>
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<abstract lang="en">I discuss possible problems engendered by loss of national monetary policies, and study them from three empirical perspectives. First, are business cycles sufficiently synchronized across EMU member countries? The evidence suggests that economic activity in those countries has become increasingly correlated in the 1990s, and that policy co–ordination has played a role in generating that outcome. Second, are there asymmetries in the mechanisms through which policy affects economic activity? The paper documents that policy transmission was indeed heterogeneous in the member countries, and that structural and financial factors were sensibly related to cross–country differences in the response of output to a monetary policy shock. Third, how is policy implemented in an environment of diverse business cycle fundamentals and transmission mechanisms? Estimation of monetary policy reaction functions finds that the European Central Bank is closer to an aggregate of the central banks in Germany, France, and Italy than to the Bundesbank alone.</abstract>
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<title>Economic Policy</title>
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<identifier type="ISSN">0266-4658</identifier>
<identifier type="eISSN">1468-0327</identifier>
<identifier type="DOI">10.1111/(ISSN)1468-0327</identifier>
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<date>2001</date>
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<caption>vol.</caption>
<number>16</number>
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<caption>no.</caption>
<number>33</number>
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<start>369</start>
<end>406</end>
<total>38</total>
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<identifier type="DOI">10.1111/1468-0327.00079</identifier>
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<accessCondition type="use and reproduction" contentType="copyright">CEPR, CES, MSH, 2001</accessCondition>
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