Spillover of the ECB's monetary policy outside the euro area: How different is conventional from unconventional policy?

Korte inhoud:This paper compares the macroeconomic impact of conventional and unconventional ECB policy actions on the euro area and its spillover to six other EU countries. The comparison is based on the evolution of a synthetic index of overall euro area monetary conditions (MCI) that can be decomposed in conventional and unconventional policy decisions. A standard monetary VAR including the MCI shows that the transmission of unconventional monetary policy in the euro area is quite different than under conventional policy: prices react quickly, but the response of output is muted. A block-restricted VAR model to measure the spillover of ECB policy confirms the importance of euro area monetary policy for macroeconomic developments in other EU countries. But while conventional monetary policy affects economic activity, exchange rates and prices, unconventional measures have generated a variety of responses. Exchange rates respond rather quickly, but an effect on the real economy is found only for some countries, and inflation remains largely unaffected.

Jaar van publicatie:2016

Trefwoorden:Monetary policy, ECB, Unconventional measures, VAR, Synthetic indicator, business, economics, planning

CSS-citation score:2

Auteurs:International

Toegankelijkheid:Closed

Reviewstatus:Peerreview