Is the View from the Eurotower Purely European? - National Divergence and ECB Interest Rate Policy

Felix Huefner () and Friedrich Heinemann

No 110, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: The official view on ECB monetary policy claims that decisions are based on euro zone data and that diverging regional developments are disregarded. To test empirically whether regional developments have an impact on ECB decisions we develop a generalised monetary policy reaction function which allows for an influence of regional divergence. Reaction function estimations and a probit model of interest rate decisions for the first years of the euro area offer some first weak support for an impact of regional divergence. The results clarify that ignoring a potential national perspective may lead to biased estimates for the ECB reaction function.

Keywords: ECB; monetary policy; Taylor rule (search for similar items in EconPapers)
JEL-codes: E58 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-eec, nep-geo and nep-mon
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Related works:
Journal Article: IS THE VIEW FROM THE EUROTOWER PURELY EUROPEAN? – NATIONAL DIVERGENCE AND ECB INTEREST RATE POLICY (2004)
Working Paper: Is the View from the Eurotower Purely European? National Divergence and ECB Interest Rate Policy (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:110

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