Heterogeneity in the Transmission of ECB Monetary Policy

This paper examines the asymmetric effects of standard measures of ECB monetary policy across the EMU-12 member states of the euro area. At the member state level, we find a considerable degree of heterogeneity in the response... [ view full abstract ]

This paper examines the asymmetric effects of standard measures of ECB monetary policy across the EMU-12 member states of the euro area. At the member state level, we find a considerable degree of heterogeneity in the response of output to monetary policy shocks, both in the scale of the effect and the response path. We then attempt to group countries by specific structural characteristics, finding support for a number of factors that can affect the monetary policy transmission mechanism, including: the manufacturing share of output, the relative size of the banking sector and the ratio of investment to GDP.