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Monetary policy in the Euro area: Lessons from the first years

Volker Clausen and Bernd Hayo ()

No B 09-2002, ZEI Working Papers from University of Bonn, ZEI - Center for European Integration Studies

Abstract: This paper investigates in a consistent semi-structural empirical framework three current issues of monetary policy in the euro area. First, regarding policy transmission we offer a three-stage procedure to combine the efficient estimation of economic structure prior to EMU with current ECB monetary policy. Second, we test whether the regime change leads – before or after – EMU to structural instability. Third, we investigate the stance of monetary policy in Europe. We compare a “counterfactual” ECB reaction function based on average interest rates prior to EMU with actual ECB policy. Furthermore, we compare actual ECB policy with interest rate projections using Bundesbank reaction functions and euroland data.

Keywords: European Monetary Union; Monetary policy; Semi-structural modelling; Reaction function; Taylor rule; Transmission mechanism (search for similar items in EconPapers)
JEL-codes: E52 F41 (search for similar items in EconPapers)
Date: 2002
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Working Paper: Monetary Policy in the Euro Area - Lessons from the First Years (2003) Downloads
Working Paper: Monetary Policy in the Euro Area - Lessons from the First Years (2002) Downloads
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