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The Regional Transmission of UK Monetary Policy

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  • Sheila C. Dow
  • Alberto Montagnoli

Abstract

Dow S. C. and Montagnoli A. (2007) The regional transmission of UK monetary policy, Regional Studies 41, 797-808. Concerns have been raised in the media about a 'one-size-fits-all' monetary policy for the UK. If there are diverse economic conditions in different regions, then a unitary monetary policy cannot suit all. The purpose of this paper is to explore this issue further by breaking it down into two separate issues. First there is the more conventional way of considering the question, in terms of the effect of a particular interest rate change on regions experiencing different economic conditions. This requires a consideration of the nature and causes of regional economic disparities in the UK, and how these might be affected by particular interest rate changes. But there is further the question of how monetary policy is transmitted to the different regions. The possibility is considered that there may be regional differences in how a particular monetary policy is translated into different financial conditions in different regions. In other words there may be a regional dimension to the transmission process itself. The focus here will be on the regional structure of the financial sector and financial behaviour, and in particular the credit market. The argument is explored further with a comparison of Scottish and UK data. Dow S. C. et Montagnoli A. (2007) La transmission au niveau regional de la politique monetaire du Royaume-Uni, Regional Studies 41, 797-808. Les medias ont suscite quelques inquietudes quant a la mise en oeuvre d'une politique monetaire 'unique' au R-U. Tout en remettant en question l'idee selon laquelle un ajustement donne du taux d'interet reflete parfaitement la transmission de la politique monetaire, on considere si, oui ou non, il existe des variations regionales de la transmission de la politique monetaire sous diverses conditions financieres, et donc sous diverses conditions economiques, suivant la region. L'analyse laisse supposer que, tandis que la politique monetaire du R-U pourrait avoir l'impact le plus grand sur les regions centrales a court terme, l'impact le plus durable a long terme se ferait sur les regions peripheriques. Une comparaison des donnees aupres de l'Ecosse et du R-U en fournit quelques preuves. Ecosse R-U Politique monetaire Economies regionales Dow S. C. und Montagnoli A. (2007) Die regionale Ubertragung der britischen W ahrungspolitik, Regional Studies 41, 797-808. In den Medien ist Kritik an einer 'gleichmacherischen' Wahrungspolitik fur Grossbritannien laut geworden. Wir stellen die Annahme in Frage, dass eine gegebene Zinssatzanderung vollstandig wiedergibt, wie Wahrungspolitik ubertragen wird, und ziehen die Moglichkeit in Betracht, dass es regionale Unterschiede dabei geben kann, wie die Wahrungspolitik in verschiedenen Regionen in verschiedene finanzielle (und somit wirtschaftliche) Bedingungen ubersetzt wird. Aus der Analyse geht hervor, dass sich die britische Wahrungspolitik zwar kurzfristig am starksten auf die zentralen Regionen auswirkt, langfristig aber in den peripheren Regionen eine grossere und nachhaltige Wirkung zeigt. Belege hierfur liefert ein Vergleich von Daten aus Schottland und Grossbritannien. Schottland GB Wahrungspolitik Regionalwirtschaften Dow S. C. y Montagnoli A. (2007) La transmision regional de la politica monetaria britanica, Regional Studies 41, 797-808. En el Reino Unido la politica monetaria con un enfoque unico para todos ha suscitado preocupacion en los medios de comunicacion. Cuestionando la suposicion de que un determinado cambio en la tasa de interes refleja totalmente el modo en que se transmite la politica monetaria, consideramos la posibilidad de que podrian existir diferencias regionales en cuanto a como se traduce en diferentes regiones la politica monetaria en distintas condiciones financieras. Este analisis indica que si bien la politica monetaria britanica podria tener a corto plazo una mayor influencia en las regiones centrales, se observa una mayor repercusion sostenida a largo plazo en las regiones perifericas. Como ejemplo comparamos datos escoceses y britanicos. Escocia GB Politica monetaria Economias regionales

Suggested Citation

  • Sheila C. Dow & Alberto Montagnoli, 2007. "The Regional Transmission of UK Monetary Policy," Regional Studies, Taylor & Francis Journals, vol. 41(6), pages 797-808.
    • Handle: RePEc:taf:regstd:v:41:y:2007:i:6:p:797-808
    DOI: 10.1080/00343400601142779
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    References listed on IDEAS

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    1. Joe Ganley & Chris Salmon, 1997. "The Industrial Impact of Monetary Policy Shocks: Some Stylised Facts," Bank of England working papers 68, Bank of England.
    2. Gabe J. de Bondt, 2000. "Financial Structure and Monetary Transmission in Europe," Books, Edward Elgar Publishing, number 2015, March.
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    2. Sheila Dow & Alberto Montagnoli & Oreste Napolitano, 2012. "Interest Rates and Convergence across Italian Regions," Regional Studies, Taylor & Francis Journals, vol. 46(7), pages 893-905, October.
    3. Ageliki Anagnostou & Stephanos Papadamou, 2012. "The effects of Monetary Policy shocks across the Greek Regions," ERSA conference papers ersa12p507, European Regional Science Association.
    4. Angeliki ANAGNOSTOU & Stephanos PAPADAMOU, 2014. "The Impact Of Monetary Shocks On Regional Output: Evidence From Four South Eurozone Countries," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 39, pages 105-130.
    5. Maurizio La Rocca & Tiziana La Rocca & Alfio Cariola, 2011. "Capital Structure Decisions During a Firm's Life Cycle," Small Business Economics, Springer, vol. 37(1), pages 107-130, July.
    6. Alberto Montagnoli & Jun Nagaysu, 2013. "An investigation of housing affordability in the UK regions," Working Papers 1316, University of Strathclyde Business School, Department of Economics.
    7. de Groot, Oliver & Hauptmeier, Sebastian & Holm-Hadulla, Fédéric & Nikalexi, Katerina, 2020. "Monetary policy and regional inequality," Working Paper Series 2385, European Central Bank.
    8. Steve Cook, 2012. "β-convergence and the Cyclical Dynamics of UK Regional House Prices," Urban Studies, Urban Studies Journal Limited, vol. 49(1), pages 203-218, January.
    9. Eiblmeier, Sebastian, 2023. "Differential Effects of Unconventional Monetary Policy," Hannover Economic Papers (HEP) dp-707, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
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    11. Korobilis, Dimitris & Gilmartin, Michelle, 2010. "The dynamic effects of U.S. monetary policy on state unemployment," MPRA Paper 27596, University Library of Munich, Germany.
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    13. 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.
    14. 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.
    15. John K. Ashton & Andros Gregoriou, 2014. "The Influence of Banking Centralization on Depositors: Regional Heterogeneities in the Transmission of Monetary Policy," Regional Studies, Taylor & Francis Journals, vol. 48(9), pages 1467-1482, September.
    16. 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.

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