IDEAS home Printed from https://ideas.repec.org/a/taf/regstd/v37y2003i9p969-980.html
   My bibliography  Save this article

EMU and the Regional Impact of Monetary Policy

Author

Listed:
  • Carlos Rodriguez-Fuentes
  • Sheila Dow

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 verursachten. Diese asymmetrischen Auswirkungen konnten nur durch die Mobilitat der Arbeiterschaft und Elastizitat von Lo hnen und Preisen aufgefangen werden. Die Autoren stellen hier jedoch die Behauptung auf, dass die europaische Wahrungspolitik zusatzlich weitere, allgemeine regionale Auswirkungen haben ko nne, unter anderem besonders die Schaffung vermehrter Instabilitat im Muster der Kreditvergebung fur gewisse peripherale Regionen. Diese letztere Moglichkeit, und die ihr zugrunde liegenden Krafte werden hier sowohl auf theoretischer wie auf impirischer Ebene untersucht, indem sie den Vorgang prufen, durch den Wahrungspolitik vermittelt wird.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:regstd:v:37:y:2003:i:9:p:969-980
    DOI: 10.1080/0034340032000143959
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/0034340032000143959
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/0034340032000143959?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Angeloni, Ignazio & Dedola, Luca, 1999. "From the ERM to the euro: new evidence on economic and policy convergence among EU countries," Working Paper Series 4, European Central Bank.
    2. Mark Gertler & Simon Gilchrist, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 309-340.
    3. Chick, Victoria & Dow, Sheila, 1988. "A Post-Keynesian Perspective on the Relation Between Banking and Regional Development," Stirling Economics Discussion Papers PE/88/1, University of Stirling, Division of Economics.
    4. Maurice Obstfeld & Giovanni Peri, 1998. "Regional non-adjustment and fiscal policy," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 206-259.
    5. Penelope Hawkins, 2003. "The Open Economy and its Financial Constraints," Books, Edward Elgar Publishing, number 2762, March.
    6. Ron Martin, 2001. "EMU versus the regions? Regional convergence and divergence in Euroland," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 51-80, January.
    7. Alvaro Angeriz & Philip Arestis, 2007. "Monetary policy in the UK," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(6), pages 863-884, November.
    8. Enrico Marelli, 1985. "Economic Policies And Their Effects Upon Regional Economies," Papers in Regional Science, Wiley Blackwell, vol. 58(1), pages 127-139, January.
    9. Vijay K. Mathur & Sheldon Stein, 1982. "The Regional Impact Of Monetary And Fiscal Policy: Some Further Results," Papers in Regional Science, Wiley Blackwell, vol. 50(1), pages 67-74, January.
    10. Gerald A. Carlino & Robert H. DeFina, 1996. "Does monetary policy have differential regional effects?," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 17-27.
    11. Gerald A. Carlino & Robert H. DeFina, 1998. "Monetary policy and the U.S. and regions: some implications for European Monetary Union," Working Papers 98-17, Federal Reserve Bank of Philadelphia.
    12. Stephen G. Cecchetti, 2001. "Legal Structure, Financial Structure and the Monetary Policy Transmission Mechanism," Palgrave Macmillan Books, in: Deutsche Bundesbank (ed.), The Monetary Transmission Process, chapter 5, pages 170-207, Palgrave Macmillan.
    13. Henk Folmer & Peter Nijkamp, 1985. "Methodological Aspects Of Impact Analysis Of Regional Economic Policy," Papers in Regional Science, Wiley Blackwell, vol. 57(1), pages 165-180, January.
    14. Paul J. Kozlowski, 1991. "Integrating Money Into Regional Models Of Leading Indicators," The Review of Regional Studies, Southern Regional Science Association, vol. 21(3), pages 235-248, Fall.
    15. Giovanni Magnifico, 1973. "European Monetary Unification," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01812-3, December.
    16. Philip Arsetis & Malcolm Sawyer (ed.), 1998. "The Political Economy of Central Banking," Books, Edward Elgar Publishing, number 1419, March.
    17. Sheila C. Dow, 1993. "Money And The Economic Process," Books, Edward Elgar Publishing, number 147, March.
    18. Kashyap, Anil K & Stein, Jeremy C & Wilcox, David W, 1993. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance," American Economic Review, American Economic Association, vol. 83(1), pages 78-98, March.
    19. Raúl Ramos & Miquel Clar & Jordi Suriñach, 1999. "Specialisation in Europe and Asymmetric Shocks: Potential Risks of EMU," Advances in Spatial Science, in: Manfred M. Fischer & Peter Nijkamp (ed.), Spatial Dynamics of European Integration, chapter 4, pages 63-93, Springer.
    20. Unknown, 1981. "Rural Impacts of Monetary Policy," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 33(4), pages 1-11, October.
    21. Sheila Dow & Carlos Rodriguez-Fuentes, 1997. "Regional Finance: A Survey," Regional Studies, Taylor & Francis Journals, vol. 31(9), pages 903-920.
    22. Ira. O. Scott, 1955. "The Regional Impact of Monetary Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(2), pages 269-284.
    23. 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.
    24. Thurston, Thom B, 1976. "Regional Interaction and the Reserve Adjustment Lag within the Commercial Banking Sector," Journal of Finance, American Finance Association, vol. 31(5), pages 1443-1456, December.
    25. Roy J. Ruffin, 1968. "An Econometric Model Of The Impact Of Open Market Operations On Various Bank Classes," Journal of Finance, American Finance Association, vol. 23(4), pages 625-637, September.
    26. Samolyk, Katherine A., 1994. "Banking conditions and regional economic performance evidence of a regional credit channel," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 259-278, October.
    27. Gerald A. Carlino & Robert H. DeFina, 1999. "Do states respond differently to changes in monetary policy?," Business Review, Federal Reserve Bank of Philadelphia, issue Jul, pages 17-27.
    28. Katherine A. Samolyk, 1991. "A regional perspective on the credit view," Economic Review, Federal Reserve Bank of Cleveland, vol. 27(Q II), pages 27-38.
    29. Gabe J. de Bondt, 2000. "Financial Structure and Monetary Transmission in Europe," Books, Edward Elgar Publishing, number 2015, March.
    30. Ramos, Raul & Clar, Miquel & Surinach, Jordi, 1999. "EMU: some unanswered questions," ERSA conference papers ersa99pa220, European Regional Science Association.
    31. Anil K. Kashyap & Jeremy C. Stein, 1997. "The role of banks in monetary policy: a survey with implications for the European Monetary Union," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 22(Sep), pages 2-18.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gianni La Cava & Calvin He, 2021. "The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(3), pages 387-397, September.
    2. Frederico G. Jayme Jr. & Marco Crocco, 2005. "Fiscal policy, credit availability and financing of regional policies in Brazil," Textos para Discussão Cedeplar-UFMG td279, Cedeplar, Universidade Federal de Minas Gerais.
    3. Ana Tereza Lanna Figueiredo, 2006. "O papel da moeda nas teorias do desenvolvimento desigual: uma abordagem pós-keynesiana," Textos para Discussão Cedeplar-UFMG td293, Cedeplar, Universidade Federal de Minas Gerais.
    4. José Manuel Pastor & Jose M. Pavía & Lorenzo Serrano & Emili Tortosa-Ausina, 2017. "Rich regions, poor regions and bank branch deregulation in Spain," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1678-1694, November.
    5. Sheila Dow, 2016. "Ontology and Theory for a Redesign of European Monetary Union," World Economic Review, World Economics Association, vol. 2016(6), pages 1-1, February.
    6. 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.
    7. Frederico G. Jayme Jr. & Marco Crocco, 2005. "Política Fiscal, Disponibilidade De Crédito E Financiamento De Políticas Regionais No Brasil (Versão Preliminar Para Discussão)," Working Papers 0016, Universidade Federal do Paraná, Department of Economics.
    8. Sheila Dow, 2014. "The Relationship Between Central Banks And Governments: What Are Central Banks For?," Department Discussion Papers 1401, Department of Economics, University of Victoria.
    9. David Parsley & Helen Popper, 2021. "Risk Sharing in a Politically Divided Monetary Union," Open Economies Review, Springer, vol. 32(4), pages 649-669, September.
    10. de Groot, Oliver & Hauptmeier, Sebastian & Holm-Hadulla, Fédéric & Nikalexi, Katerina, 2020. "Monetary policy and regional inequality," Working Paper Series 2385, European Central Bank.
    11. Zeyyad Mandalinci, 2015. "Effects of Monetary Policy Shocks on UK Regional Activity: A Constrained MFVAR Approach," Working Papers 758, Queen Mary University of London, School of Economics and Finance.
    12. Zan Yang & Shuping Wu & Yanhao Shen, 2017. "Monetary Policy, House Prices, and Consumption in China: A National and Regional Study," International Real Estate Review, Global Social Science Institute, vol. 20(1), pages 23-49.
    13. Martin Sokol & Leonardo Pataccini, 2022. "Financialisation, regional economic development and the coronavirus crisis: a time for spatial monetary policy? [The financialization of home and the mortgage market crisis]," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 15(1), pages 75-92.
    14. Ridhwan, M.M. & Nijkamp, P. & Rietveld, P., 2008. "Regional development and monetary policy : a review of the role of monetary unions, capital mobility and locational effects," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    15. Giuseppe Albanese & Pietro De Matteis, 2014. "L?evoluzione delle politiche di coesione: dibattito teorico e prospettive," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2014(1), pages 5-24.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rodríguez-Fuentes, Carlos Javier & Hernández-López, Montserrat, 1997. "Análisis de diferencias estructurales interregionales determinantes en el impacto de la política monetaria," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 7, pages 141-157, Junio.
    2. 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).
    3. Ridhwan, M.M. & Nijkamp, P. & Rietveld, P., 2008. "Regional development and monetary policy : a review of the role of monetary unions, capital mobility and locational effects," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    4. K. Raabe & I. Arnold & C.J.M. Kool, 2006. "Firm Size and Monetary Policy Transmission: A Theoretical Model on the Role of Capital Investment Expenditures," Working Papers 06-14, Utrecht School of Economics.
    5. I. Arnold & C.J.M. Kool & K. Raabe, 2005. "New evidence on the firm size effects in US monetary policy transmission," Working Papers 05-11, Utrecht School of Economics.
    6. Francesco Giavazzi, 1999. "The Transmission Mechanism of Monetary Policy in Europe: Evidence from Banks’ Balance Sheets," Working papers 99-20, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. Driscoll, John C., 2004. "Does bank lending affect output? Evidence from the U.S. states," Journal of Monetary Economics, Elsevier, vol. 51(3), pages 451-471, April.
    8. Ivo J. M. Arnold & Evert B. Vrugt, 2004. "Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany," German Economic Review, Verein für Socialpolitik, vol. 5(1), pages 35-59, February.
    9. 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.
    10. Jeremy C. Stein & Anil K. Kashyap, 2000. "What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?," American Economic Review, American Economic Association, vol. 90(3), pages 407-428, June.
    11. Dedola, Luca & Lippi, Francesco, 2005. "The monetary transmission mechanism: Evidence from the industries of five OECD countries," European Economic Review, Elsevier, vol. 49(6), pages 1543-1569, August.
    12. Kakes, Jan & Sturm, Jan-Egbert, 2002. "Monetary policy and bank lending:: Evidence from German banking groups," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2077-2092, November.
    13. Giuseppe Marotta, 2001. "Is trade credit more expensive than bank loans? Evidence from Italian firm-level data," Heterogeneity and monetary policy 0103, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
    14. Verónica Mies & Felipe Morandé & Matías Tapia, 2002. "Política Monetaria y Mecanismos de Transmisión: Nuevos Elementos para una Vieja Discusión," Working Papers Central Bank of Chile 181, Central Bank of Chile.
    15. 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.
    16. Iacoviello, Matteo & Minetti, Raoul, 2008. "The credit channel of monetary policy: Evidence from the housing market," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 69-96, March.
    17. Jeong, Woocheon & Kymn, Kem O. & Kymn, Christine J., 2003. "The long-run interdependence of bank-health, investment-oriented bank loans, and economic performance: A time-series analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(1), pages 11-30.
    18. G.J. De Bondt, 1999. "Credit channels in Europe: a cross-country investigation," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 52(210), pages 295-326.
    19. Stephanos Papadamou & Costas Siriopoulos, 2012. "Banks’ lending behavior and monetary policy: evidence from Sweden," Review of Quantitative Finance and Accounting, Springer, vol. 38(2), pages 131-148, February.
    20. Adams, Robert M. & Amel, Dean F., 2011. "Market structure and the pass-through of the federal funds rate," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1087-1096, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:regstd:v:37:y:2003:i:9:p:969-980. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CRES20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.