Cross-Country Differences in Monetary Policy Transmission

65 Pages Posted: 13 Dec 2004

See all articles by Robert-Paul Berben

Robert-Paul Berben

De Nederlandsche Bank - Monetary and Economic Policy Department

Alberto Locarno

Bank of Italy

Julian Benedict Morgan

European Central Bank (ECB)

Javier Vallés

Government of the Kingdom of Spain - Economic Bureau of the President

Date Written: October 2004

Abstract

This paper examines possible explanations for observed differences in the transmission of euro area monetary policy in central bank large-scale macroeconomic models. In particular it considers the extent to which these differences are due to differences in the underlying economies or (possibly unrelated) differences in the modelling strategies adopted for each country. It finds that, against most yardsticks, the cross-country variations in the results are found to be plausible in the sense that they correspond with other evidence or observed characteristics of the economies in question. Nevertheless, the role of differing modelling strategies may also play a role. Important features of the models - for instance in the treatment of expectations or wealth - can have a major bearing on the results that may not necessarily reflect differences in the underlying economies.

Keywords: monetary transmission, macroeconometric models, euro area differences

JEL Classification: C53, E52, E37

Suggested Citation

Berben, Robert-Paul and Locarno, Alberto and Morgan, Julian Benedict and Vallés, Javier, Cross-Country Differences in Monetary Policy Transmission (October 2004). Available at SSRN: https://ssrn.com/abstract=587268 or http://dx.doi.org/10.2139/ssrn.587268

Robert-Paul Berben (Contact Author)

De Nederlandsche Bank - Monetary and Economic Policy Department ( email )

Westeinde 1
P.O. Box 98
1017 ZN Amsterdam
Netherlands

Alberto Locarno

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Julian Benedict Morgan

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0049 69 1344 6000 (Fax)

Javier Vallés

Government of the Kingdom of Spain - Economic Bureau of the President ( email )

28071 Madrid
Spain

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