Asymmetric Monetary Transmission in Europe

This study investigates whether the common monetary policy by the European Central Bank leads to asymmetric macroeconomic developments in the EU member countries. Several theoretical models of monetary unions are developed to assess how differences in particular channels of transmission translate into differences in the overall strength of monetary transmission within the EMU. As an extension to other studies in this field, we investigate not only the macroeconomic relevance of asymmetries in financial structure, but also the implications of asymmetries in goods and labor markets. In the empirical part, this study critically evaluates previous empirical evidence and presents new econometric results on asymmetric monetary transmission in Europe. The final part describes the structural changes after the establishment of EMU and evaluates their implications for asymmetric monetary transmission in Europe. TOC:Introduction.- Sources of Asymmetric Monetary Transmission in Europe.- Financial Structure and Asymmetric Monetary Transmission: Implications of a Differential Role of Asset Markets.- Financial Structure and Asymmetric Monetary Transmission: Implications of a Differential Interest Elasticity of Aggregate Demand.- Financial Structure, Asymmetric National Money Demand Functions and the Stability of European Money Demand.- Asymmetric Degrees of Openness and Monetary Transmission in Europe.- Asymmetric Wage-Price Mechanisms and Monetary Transmission in Europe.- Empirical Evidence on Asymmetric Monetary Transmission in Europe.- Monetary Policy in an Era of Structural Change.