The Regional Effects of Monetary Policy in Europe
Since the inception of EMU, a common concern is that European monetary policy may have differential effects on EMU member countries. However, the reliance on cross-country evidence in the empirical literature risks overemphasizing the importance of cross-country differences in monetary transmission. This paper therefore takes a regional approach. Data from 58 European regions show significant cross-regional differences in the effects of monetary policy within the five largest EU countries. For all regions combined, I find a significant relationship between the impact of monetary policy and the industrial composition of regions, supporting earlier findings for the US. I conclude that at present the large European countries are regionally well-diversified enough to minimize the risk that ECB policy will produce a markedly different impact across countries.
Year of publication: |
2001
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Authors: | J.M. Arnold, Ivo |
Published in: |
Journal of Economic Integration. - Department of Economics and Trade. - Vol. 16.2001, p. 399-420
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Publisher: |
Department of Economics and Trade |
Subject: | Monetary Transmission | Regional Effects | EMU |
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