Together or Apart? Monetary Policy Divergences in the G4

Samuel Howorth (), Domenico Lombardi () and Pierre Siklos
Additional contact information
Samuel Howorth: CIGI
Domenico Lombardi: Banca di San Marino S.p.A

Open Economies Review, 2019, vol. 30, issue 2, No 1, 217 pages

Abstract: Abstract We evaluate monetary policy divergence in the G4. A Taylor rule is extended that admits a global element and also allows for unconventional monetary policy to be reflected in a shadow policy rate. We propose a policy divergence index based on observed, fitted, or shadow policy rates but which interprets the stance of monetary as dictated by the real interest rate. In spite of flexible exchange rates, each economy’s monetary policy is significantly impacted by a global element, pre and post-crisis. Our divergence index also suggests more divergence in the stance of monetary policy than if nominal policy rates alone are compared, whether observed or shadow rates are used. Nevertheless, we conclude that US monetary policy’s impact among other systemically important economies has increased since the global financial crisis although divergences persist.

Keywords: Monetary policy rule; Policy divergence; G4 (search for similar items in EconPapers)
JEL-codes: E31 E32 E43 E58 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s11079-019-09524-y Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:openec:v:30:y:2019:i:2:d:10.1007_s11079-019-09524-y

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2

DOI: 10.1007/s11079-019-09524-y

Access Statistics for this article

Open Economies Review is currently edited by G.S. Tavlas

More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().