THE ASYMMETRIC EFFECTS OF A COMMON MONETARY POLICY IN EUROPE

Guglielmo Maria Caporale () and Alaa M. Soliman

Economics and Finance Discussion Papers from Economics and Finance Section, School of Social Sciences, Brunel University

Abstract: This paper examines the monetary transmission mechanism in eight EU member states. It provides useful empirical evidence for assessing the impact of a common monetary policy in the early stages of EMU, and enables us to form a view on how the regime change represented by EMU is likely to be translated into changes in policy multipliers in the various EU countries. The empirical analysis applies techniques recently developed by Wickens and Motto (2001) for identifying shocks by estimating a VECM for the endogenous variables, and a stationary VAR in first differences for the exogenous variables. Our findings suggest that there are significant differences between EU countries in the transmission mechanism of monetary policy.

New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
Date: 2005-12
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Persistent link: http://EconPapers.repec.org/RePEc:bru:bruedp:05-20

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