Monetary Policy, the Composition of GDP, and Crisis Duration in Europe

Global Economic Review, 2016, Vol. 45, No. 2: 206-2019

24 Pages Posted: 31 Dec 2015 Last revised: 14 Jan 2017

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

The University of Texas at El Paso; American Institute for Economic Research; UCEMA Friedman-Hayek Center for the Study of a Free Society

Andreas Hoffmann

affiliation not provided to SSRN

Date Written: December 7, 2015

Abstract

This paper analyzes the effects of changes in interest rates on the composition of production in ten European countries during the boom period of the 2000s. We find that output elasticity differs across industries and across countries for similar industries. The paper suggests that in the run-up to the 2008 crisis, the ECB’s low interest rate policy affected the allocation of resources across industries. This may explain the sluggish overall recovery from the crisis in Europe.

Keywords: Monetary Policy, Interest Rate Sensitivity, Crisis Duration, GDP Composition

JEL Classification: E32, E52, E58

Suggested Citation

Cachanosky, Nicolas and Hoffmann, Andreas, Monetary Policy, the Composition of GDP, and Crisis Duration in Europe (December 7, 2015). Global Economic Review, 2016, Vol. 45, No. 2: 206-2019, Available at SSRN: https://ssrn.com/abstract=2709192

Nicolas Cachanosky (Contact Author)

The University of Texas at El Paso

500 West University Avenue
El Paso, TX 79968
United States

HOME PAGE: http://https://www.utep.edu/

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

UCEMA Friedman-Hayek Center for the Study of a Free Society ( email )

Buenos Aires
Argentina

Andreas Hoffmann

affiliation not provided to SSRN

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