Do Euro Area Countries Respond Asymmetrically to the Common Monetary Policy?

Abstract

We investigate the possible existence of asymmetries among Euro Area countries reactions to the European Central Bank monetary policy. Our analysis is based on a Structural Dynamic Factor model estimated on a large panel of Euro Area quarterly variables. We find that, despite the single monetary policy has had the effect of reducing heterogeneity in impulse responses, member states still react asymmetrically in terms of prices and unemployment, while no difference appears in terms of output. These results are the consequence of country specific structures, rather than of European Central Bank policies.JEL Classification: C32, E41, E52

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