Monetary Policy Under Emu Differences in the Transmission Mechanism?

By Benedict Clements, Zenon G. Kontolemis, J. Levy. Social Science Research Network, 2001

113 citations recorded by the source corpus.

This study identifies differences in the monetary policy transmission mechanism across the countries in the euro area. It is argued that part of the differences in the response of economic activity to monetary policy during the pre-EMU period, found in other studies, reflected differences in monetary policy reaction functions, rather than different transmission mechanisms. In light of this, the paper constructs an empirical model on the basis of common reaction functions. The results confirm that even when a common monetary policy is implemented, its effects on economic activity are likely to differ across EMU countries. The paper also constructs an aggregate measure of the effect of monetary policy on prices and output. Finally, the paper examines the relative strength of the credit, exchange rate, and interest rate channels of monetary transmission in EMU countries.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/1e4d46de01931fbcff4a8a3bbb4b87f9dbffd275

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Citations in the corpus

Do Euro Area Countries Respond Asymmetrically to the Common Monetary Policy (2014, unknown): “In spite of some exceptions (Clements et al., 2001; Ciccarelli and Rebucci, 2006; Rafiq and Mallick, 2008), a substantial consensus is reached by these studies on excluding asymmetric effects of monetary policy across member states.”
Monetary policy and the transmission mechanism in Thailand (2003, background): “25 Clements, Kontolemis, and Levy (2001) also find that the exchange rate channel in the Euro-area countries is relatively small and attribute the result to weak responses of output to movements in the effective exchange rate.”
The Transmission of Monetary Policy in the Euro Area: Are the Effects Different Across Countries?* (2004, unknown): “Clements et al. (2001) try to capture this by simulating the effects of a monetary policy shock when the bilateral exchange rate with Germany remains fixed.”
The economic consequences of euro-area macro-modelling shortcuts (2010, background): “( 2001 ), Ciccarelli and Rebucci ( 2002 ), Perman and Tavera ( 2005 ), Dedola and Lippi ( 2005 ), and the articles collected in Angeloni et al .”
Financial Systems and the Role of Banks in Monetary Policy Transmission in the Euro Area (2001, background): “…in Kashyap and Stein (1995): small banks are assumed to suffer from informational 1 These four countries, which form the group of countries studied in section 5, contribute approximately 80% to euro area GDP. 2 E.g., Ciccarelli and Rebucci (2001); Clements et al (2001); Mihov (2001); Sala (2001).”