In Search of Monetary Policy Measures : The Case of Italy in the 90s

In this paper we present a structural VAR analysis of monetary policy in Italy. A monetary policy operating regime based on the control of the overnight rate on interbank loans seems to fit the data better than alternative quantitative monetary regimes. In the anlysis we include the real exchange rate as a possible transmission channel of monetary policy shocks. We also derive a measure of the overall monetary policy stance that is able to highlight the major episodes of monetary contraction in the sample