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Cross-country differences in monetary policy transmission

Robert-Paul Berben, Alberto Locarno (), Julian Morgan and Javier Valles

No 502, Working Papers from Banco de España, Working Papers Homepage

Abstract: This paper examines possible explanations for observed differences in the transmission of euro area monetary policy in central bank large scale macroeconomic models. In particular it considers the extent to which these differences are due to differences in the underlying economies or (possibly unrelated) differences in the modelling strategies adopted for each country. It finds that, against most yardsticks, the cross country variations in the results are found to be plausible in the sense that they correspond with other evidence or observed characteristics of the economies in question. Nevertheless, the role of differing modelling strategies may also play a role. Important features of the models –for instance in the treatment of expectations or wealth– can have a major bearing on the results that may not necessarily reflect differences in the underlying economies.

Keywords: monetary transmission; macroeconometric models; euro area differences (search for similar items in EconPapers)
JEL-codes: C53 E52 E37 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2005-01
References: View references in EconPapers View complete reference list from CitEc
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