Monetary Policy Transmission in the Euro Area A Study by the Eurosystem Monetary Transmission Network

Proper conduct of monetary policy requires understanding the monetary transmission mechanism, to monitor the economy, make decisions on the stance of policy, and explain the policy actions to the public. Hence, gathering evidence on the monetary transmission mechanism in the euro area has been a priority for the Eurosystem. This 2003 book presents the results of a multi-year collaborative project conducted by the European Central Bank and the other Eurosystem central banks. First, macro data are consistently investigated with both VARs and structural models for the area as a whole and for individual countries. Second, the book contains an unprecedented set of studies on the effects of monetary policy using bank and firm panel data. The results described in country case studies and overview essays by central bank economists, along with a discussion chapter by eminent academics, provide an essential contribution to research on the subject.

Preface; Introduction; Part I. Macroeconometric Evidence on the Transmission Mechanism in the Euro Area: 1. Some stylised facts on the Euro area business cycle A.-M. Agresti and B. Mojon; 2. The monetary transmission mechanism in the Euro area: more evidence from VAR analysis G. Peersman and F. Smets; 3. A VAR description of the effects of monetary policy in the individual countries of the Euro area B. Mojon and G. Peersman; 4. Analysing monetary policy transmission mechanism at the Euro area level: using structural macroeconomic models P. McAdam and J. Morgan; 5. The effects of monetary policy in the Euro area: evidence from structural macroeconomic models P. van Els, A. Locarno, J. Morgan and J.-P. Villetelle; 6. Financial frictions and the monetary transmission mechanism: theory, evidence and policy implications C. Bean, J. Larsen and K. Nikolov; Part II. Firm Investment and Monetary Policy: Evidence from Micro-Economic Data: 7. Firm investment and monetary policy transmission in the Euro area J. B. Chatelain, A. Generale, I. Hernando, P. Vermeulen and U. von Kalckreuth; 8. Business investment and monetary transmission in Belgium P. Butzen, C. Fuss and P. Vermeulen; 9. Investment and monetary transmission in Germany: a microeconometric investigation U. von Kalckreuth; 10. Monetary policy and corporate investment in France J.B. Chatelain and A. Tiomo; 11. Monetary policy and firms' investment in Italy E. Gaiotti and A. Generale; 12. Monetary transmission: empirical evidence from Luxembourg firm-level P. Lunneman and T. Matha; 13. The role of trade credit and bank lending relationships in the transmission mechanism in Austria M. Valderrama; Part III. The Role of Banks in the Transmission: Evidence from Micro-Economic Data: 14. Financial systems and the role of banks in monetary policy transmission in the Euro area M. Ehrmann, L. Gambacorta, J. Martinez-Pagés, P. Sevestre and A. Worms; 15. The reaction of bank lending to monetary policy measures in Germany A. Worms; 16. Is there a bank lending channel of monetary policy in Spain? I. Hernando and J. Martinez-Pagés; 17. Is there a bank lending channel in France? Evidence from bank panel data C. Loupias, F. Savignac and P. Sevestre; 18. Is there a bank lending channel of monetary policy in Greece? Evidence from bank level data S. Brissimis, N. Kamberoglou and G. Simigiannis; 19. The Italian banking system and a monetary policy transmission: evidence from bank level data L. Gambacorta; 20. The impact of monetary policy on bank lending in the Netherlands L. De Haan; 21. The cross-sectional and the time dimension of the bank lending channel: The Austrian case S. Kaufmann; 22. The bank lending channel of monetary policy: identification and estimation using Portuguese micro bank data L. Farinha and C. Robalo Marques; 23. Transmission of monetary policy shocks in Finland: evidence from bank level data on loans J. Topi and J. Vilmunen; Part IV. Monetary Policy in the Euro Area: Summary and Discussion of the Main Findings: 24. Monetary policy transmission in the Euro area: where do we stand? I. Angeloni, A. Kashyap, B. Mojon and D. Terlizzese; 25. Discussion B. Bernanke, X Freixas, V. Gaspar and J. von Hagen; Appendix: 26. Economic and financial structure in the euro area A-M. Agresti and J. Claessens; References.