EMU and the Regional Impact of Monetary Policy

Abstract

RODRiGUEZ- FUENTES C. J. and DOW S. C. (2003) EMU and the regional impact of monetary policy, Reg. Studies 37, 969- 980. In this paper we focus on a topic which has been attracting renewed interest because of monetary unification in Europe: the regional dimension of national monetary policies. Most of the debate over the regional implications of the Euro has been developed within the Optimum Currency Area framework. According to this theory, European monetary policy would have regional effects when the countries of the Euro-zone had such structural differences as to produce asymmetric shocks. These asymmetrical effects could only be offset by labour mobility and wage/price flexibility. However, we argue here that, in addition, European monetary policy may have more general regional effects, including in particular by producing a higher instability in the pattern of credit availability for some peripheral regions. This latter possibility, and the forces underlying it, are explored here both at the theoretical level and the empirical level, examining the process by which monetary policy is transmitted.RODRiGUEZ- FUENTES C. J. et DOW S. C. (2003) L'Ume et les effets regionaux de la politique monetaire, Reg. Studies 37, 969-980. Cet article porte sur une question qui a fait couler beaucoup d'encre suite a l'unification monetaire europeenne: a savoir, l'etendue regionale des politiques monetaires nationales. Le de bat a porte dans une large mesure sur les effets regionaux de l'euro dans le cadre d'une Zone monetaire optimale. Selon cette theorie-la, la politique monetaire europeenne aurait des effets regionaux au moment ou les pays-membres de la zone euro auraient des ecarts structurels tels qu'il se produirait des chocs asymetriques. Ces effets asymetriques ne pourraient etre compenses que par la mobilite de la main-d'oeuvre et par la flexibilite des salaires et des prix. Cependant, on affirme que la politique monetaire europeenne pourrait avoir d'autres effets regionaux plus generaux, y compris notamment un accroissement de l'instabilite de la structure de la possibilite d' obtenir des credits pour ce qui est de certaines regions peripheriques. Cette derniere question, et ses forces motrices, se voit examinee a la fois au niveau theorique et sur le plan empririque, en examinant le processus par lequel la politique monetaire est transmise.RODRiGUEZ-FUENTES C. J. und DOW S. C. (2003) Die europaische Wahrungsunion und die regionale Auswirkung der Wahrungspolitik, Reg. Studies 37, 969-980. In diesem Aufsatz wird ein Thema angesprochen, das wegen der Vereinheitlichung der Wahrung in Europa erneutes Interesse erweckt hat: die regionale Dimension der staatlichen Wahrungspolitik. Ein Grossteil der Debatte uber regionale Auswirkungen des Euro ist im Rahmen des Optimalen Wahrungsgebietes (Optimal Currency Area) aufgetaucht. Dieser Theorie zufolge wurde die europaische Wahrungspolitik regionale Auswirkungen haben, wenn die Lander der Eurozone derartige strukturelle Unterschiede aufwiesen, dass sie asymmetrische Schocks verursa...

The Regional Effects of Monetary Policy: A Survey of the Empirical Literature

“…Within the scope of study of the regional effects of monetary policy, empirical analyses of asymmetric effects of monetary policy on economic activity date back to the 1970s (Beare, ). The territorial effects of monetary policy on economic activity might turn out to be asymmetrical if the socioeconomic structures of the territories are heterogeneous (see Rodríguez‐Fuentes and Hernández‐López, ; Rodríguez‐Fuentes and Dow, ; Rodríguez‐Fuentes, ), and hence there may be territories where the applied monetary policy is practically neutral and others where it has an effect of considerable magnitude (e.g. Carlino and Defina, , ; Georgopoulos, ; Fraser et al ., ; Ridhwan et al ., ; Georgiadis, ).…”

The Regional Transmission of UK Monetary Policy

“…showing different effects of national monetary policy on regional GDP, as discussed in the previous section (RODRIGUEZ FUENTES and DOW, 2003).…”

The Spatial Structure of Financial Development in Brazil

“…6. For a further reading in this regard see Dow & Rodríguez-Fuentes (1997), Rodríguez-Fuentes & Dow (2003) and Rodriguez-Fuentes (2006). The authors acknowledge an anonymous referee for this point.…”