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Responses to monetary policy shocks in the east and the west of Europe: a comparison

✍ Scribed by Marek Jarociński


Publisher
John Wiley and Sons
Year
2009
Tongue
English
Weight
360 KB
Volume
25
Category
Article
ISSN
0883-7252

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✦ Synopsis


Abstract

This paper compares impulse responses to monetary policy shocks in the euro area countries before the EMU and in the New Member States (NMS) from central–eastern Europe. We mitigate the small‐sample problem, which is especially acute for the NMS, by using a Bayesian estimation that combines information across countries. The impulse responses in the NMS are broadly similar to those in the euro area countries. There is some evidence that in the NMS, which have had higher and more volatile inflation, the Phillips curve is steeper than in the euro area countries. This finding is consistent with economic theory. Copyright © 2009 John Wiley & Sons, Ltd.


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