Assessing Monetary Policies in the Euro Area, the UK and the US Evidence from the Pre- and Post-Crisis Periods

Abstract

In this paper, we examine the effectiveness of monetary policies in selected countries of the Euro area (France, Germany, and Italy), the United States and the United Kingdom for the period from 1990 to 2013. We additionally focus on the 2007 financial crisis where the efficacy of both conventional and unconventional monetary policies is investigated. Our results suggest that the traditional monetary policy mechanism was effective in the pre-crisis but broke down in the post-crisis subperiod. Overall, the use of non-traditional policy measures by central banks helped improve economic conditions but not in a similar manner across countries. Specifically, such measures proved more effective in the US than in the Euro area or the UK.

Keywords: monetary policy transmission mechanism, VAR/VEC, financial crisis, unconventional policy measures, economic activity

JEL Classification: E51, E52, E58