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The Regional Effects of Monetary Policy in Europe

Author

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  • J.M. Arnold, Ivo

    (Universiteit Nyenrode)

Abstract

Since the inception of EMU, a common concern is that European monetary policy may have differential effects on EMU member countries. However, the reliance on cross-country evidence in the empirical literature risks overemphasizing the importance of cross-country differences in monetary transmission. This paper therefore takes a regional approach. Data from 58 European regions show significant cross-regional differences in the effects of monetary policy within the five largest EU countries. For all regions combined, I find a significant relationship between the impact of monetary policy and the industrial composition of regions, supporting earlier findings for the US. I conclude that at present the large European countries are regionally well-diversified enough to minimize the risk that ECB policy will produce a markedly different impact across countries.

Suggested Citation

  • J.M. Arnold, Ivo, 2001. "The Regional Effects of Monetary Policy in Europe," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 399-420.
    • Handle: RePEc:ris:integr:0171
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    Citations

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    Cited by:

    1. Todd Potts & David Yerger, 2010. "Variations Across Canadian Regions in the Sensitivity to U.S. Monetary Policy," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(4), pages 443-454, December.
    2. Carlos A. Rodríguez, 2018. "Fuentes de las fluctuaciones macroeconómicas en Puerto Rico\Sources of macroeconomic fluctuations in Puerto Rico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 33(2), pages 219-252.
    3. Arnold Ivo J. M. & Vrugt Evert B., 2004. "Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany," German Economic Review, De Gruyter, vol. 5(1), pages 35-59, February.
    4. Blanco, Emilio & Elosegui, Pedro & Izaguirre, Alejandro & Montes-Rojas, Gabriel, 2019. "Regional and state heterogeneity of monetary shocks in Argentina," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    5. Ekpeno L. Effiong & Godwin E. Esu & Chuku Chuku, 2020. "Financial development and monetary policy effectiveness in Africa," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(1), pages 160-181, June.
    6. Sousa, Pedro, 2009. "Do ECB Council Decisions represent always a Real Euro Consensus?," Working Papers 9/2009, Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE).
    7. Georgopoulos, George & Hejazi, Walid, 2009. "Financial structure and the heterogeneous impact of monetary policy across industries," Journal of Economics and Business, Elsevier, vol. 61(1), pages 1-33.
    8. Tan, Wenhao & Cao, Lin & Zhao, Jianfeng & Wang, Haolun & Shao, Chenhan, 2024. "Macroeconomic fluctuation and internal capital allocation in business group," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    9. de Groot, Oliver & Hauptmeier, Sebastian & Holm-Hadulla, Fédéric & Nikalexi, Katerina, 2020. "Monetary policy and regional inequality," Working Paper Series 2385, European Central Bank.
    10. Carlos Rodriguez-Fuentes & Sheila Dow, 2003. "EMU and the Regional Impact of Monetary Policy," Regional Studies, Taylor & Francis Journals, vol. 37(9), pages 969-980.
    11. Eiblmeier, Sebastian, 2023. "Differential Effects of Unconventional Monetary Policy," Hannover Economic Papers (HEP) dp-707, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    12. Eiblmeier, Sebastian, 2024. "Differential Effects of Unconventional Monetary Policy," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302432, Verein für Socialpolitik / German Economic Association.
    13. Ivo J. M. Arnold & Evert B. Vrugt, 2002. "Regional Effects of Monetary Policy in the Netherlands," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 123-134, August.

    More about this item

    Keywords

    Monetary Transmission; Regional Effects; EMU;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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