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

Metropolitan State University of Denver; American Institute for Economic Research

Andreas Hoffmann

Leipzig University

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)

Metropolitan State University of Denver ( email )

Student Success Building
890 Auraria Pkwy #310
Denver, CO 80217
United States

HOME PAGE: http://www.ncachanosky.edu

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

Andreas Hoffmann

Leipzig University ( email )

Institute for Economic Policy
Grimmaische Str. 12
Leipzig, 04109
Germany

HOME PAGE: http://www.a-hoffmann.info

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