The monetary transmission mechanism in the euro area: A VAR-analysis for Austria and Germany

Bernhard Bartels

No 452, Kiel Advanced Studies Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: With the transition to the European Monetary Union (EMU), the instrument of monetary policy for individual member countries has been abolished. This step has led to serious challenges for the different states to stabilize their economies to various economic shocks. Different labor market rigidities lead to different responses to monetary impulses in the countries. This paper deals with this problem by setting up a VAR-analysis to investigate the different shocks on Germany and Austria. The results show that Germany experiences less fluctuation in growth and unemployment than Austria which can be assigned to higher labor market rigidities.

Keywords: Monetary transmission mechanism; vector autoregression (search for similar items in EconPapers)
JEL-codes: D21 F14 L22 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwasw:452

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