Do Euro Area Countries Respond Asymmetrically to the Common Monetary Policy?
32 Pages Posted: 14 Jun 2010 Last revised: 29 Oct 2012
Date Written: October 22, 2012
We investigate the possible existence of asymmetries among Euro Area countries reactions to the European Central Bank monetary policy. Our analysis is based on a Structural Dynamic Factor model estimated on a large panel of Euro Area quarterly variables. We find that, despite the single monetary policy has had the effect of reducing heterogeneity in impulse responses, member states still react asymmetrically in terms of prices and unemployment, while no difference appears in terms of output. These results are the consequence of country specific structures, rather than of European Central Bank policies.
Keywords: Monetary Policy Transmission, Asymmetric Effects, European Monetary Union, Structural Dynamic Factor Model
JEL Classification: C32, E41, E52
Suggested Citation: Suggested Citation