Endogenous Financial Structure and the Transmission of ECB Policy

  • Ivo J. M. Arnold
  • Casper G. de Vries
Part of the ZEI Studies in European Economics and Law book series (ZEIS, volume 1)


As a legacy of the Fast, capital and money market structures still differ considerably across EMU countries at the start of European monetary union. There is a widely held view among academics and policymakers that these differences are an important matter of concern for the ECB, as they might thwart a uniform transmission of monetary policy. Therefore, so the argument goes, the short and medium term real,md financial market responses to monetary policy innovations will differ across thc; countries of the EMU.


Monetary Policy Capital Market Monetary Union Money Market Money Demand 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Arnold, I.J.M. (1994) “The myth of a stable European money demand.” Open Economies Review, 5, 3, 245–259.CrossRefGoogle Scholar
  2. Arnold, I.J.M. (1997) “Mo ietary targeting in the EMU: lessons from the United States.” Kredit und Kapital 30, 3, 348–368.Google Scholar
  3. Arnold, I.J.M. and R.G.J. d,n Hertog. (1995) “European time series relationships between inflation and inflation uncertainty: in seal:h of threshold levels.” De Economist 143, 4, 495–519.CrossRefGoogle Scholar
  4. Arnold, I.J.M. and C.G. de Vries. (1998) “The Euro, prudent coherence?” Tinbergen Institute discussion paper, 98–070 /2.Google Scholar
  5. Artis, M.J. (1996). “Curren.,3(substitution in European financial markets.” in P. Mizen and E. Pentecost (eds) The macroeconomics of international currencies, theory, policy and evidence, Edward Elgar, 139154.Google Scholar
  6. Artis, M.J., R.C. Bladen-H rvell, and W. Zhang. (1992) “A European money demand function.” in P. Masson and M. Taylor (ed;) Policy issues in the operation of currency unions, Cambridge University Press.Google Scholar
  7. Artis, M.J., Z.G. Kontomeli s and D.R. Osborn. (1997) “Business cycles for G7 and European countries.” Journal of Business 70, 2, 249–279.Google Scholar
  8. Artis, M.J., and W. Zhang. (1992) “International business cycles and the ERM: is there a European business cycle?” CEPR disc ussion paper no. 1191.Google Scholar
  9. Backus, D., S. Foresi, C. “’elmer. (1996) ”Affine models of currency pricing.“ NBER working paper 5623.Google Scholar
  10. Ball, L. (1992) “Why does I igh inflation raise inflation uncertainty?” Journal of Monetary Economics 29, 371–388.CrossRefGoogle Scholar
  11. Barclay, M.J. and C.W. Sr iith. (1995) “The maturity structure of corporate debt.” Journal of Finance, 609–631.Google Scholar
  12. Bamea, A., R.A. Haugen and L.W. Senbet. (1980) “A rationale for debt maturity structure and call provisions in the agency the oretic framework.” Journal of Finance, 1223–1234.Google Scholar
  13. Bekx, P. and G. Tullio. (1589) “A note on the European monetary system, and the determination of the DM-dollar exchange rate.” ’ahiers Economiques de Bruxelles 123, 329–343.Google Scholar
  14. Bernanke, B. S., and M. W)odford. (1997) “Inflation forecasts and monetary policy.” Journal of Money, Credit and Banking 29, 653–684.CrossRefGoogle Scholar
  15. Bester, H. (1985) “Screeni; ig versus rationing in credit markets with imperfect information.” American Economic Review, 850–855Google Scholar
  16. Borio, C.E.V. (1996) “Cred.t characteristics and the monetary policy transmission mechanism in fourteen industrial countries: facts, conjectures and some econometric evidence.” in K. Alders, K.Koedijk, C.Kool and C. Winder (eds) Monet try policy in a converging Europe, Kluwer, 77–115.Google Scholar
  17. Britton, E. and J. Whitley. (1997) “Comparing the monetary transmission mechanism in France, Germany and the United Kingdom: si me issues and results.” Bank of England Quarterly Bulletin, 152–162.Google Scholar
  18. Browne, F.X., G. Fagan a id J. Henry. (1997) “Money demand in EU countries: a survey.” European Monetary Institute Staff Pal ier 7.Google Scholar
  19. Bundesbank. (1995) “Dem and for money and currency substitution in Europe.” Deutsche Bundesbank Monthly Report, January, 3;-49.Google Scholar
  20. Calvo, G.A, and M. Obstfeld. (1990) Time consistency of fiscal and monetary policy: a comment.“ Econometrica, 1245–1247.Google Scholar
  21. Campbell, J.Y. and R.J. Shiller. (1996) “A scorecard for indexed government debt (1996).” in NBER Macroeconomics Annual, MIT Press, Cambridge, 155–197.Google Scholar
  22. Carlino, G.A. and R. DeFina. (1997) “The differential effects of monetary policy: evidence from the U.S. states.” FED working paper 97–12.Google Scholar
  23. Carlino, G. A. and R. DeFina. (1998) “Monetary policy and the U.S. states and regions: some implications for European monetary union.” FED working paper 98–17.Google Scholar
  24. Cassard, M., T. Lane and P. Masson. (1994) “ERM money supplies and the transition to EMU.” IMF Working Paper, 94 /1.Google Scholar
  25. Cukierman, A. (1992) Central bank strategy, credibility, and independence: theory and evidence. MIT press.Google Scholar
  26. Cukierman, A. and A. Meltzer. (1986) “A theory of ambiguity, credibility, and inflation under discretion and asymmetric information.” Econometrica 54, 1099–1128.CrossRefGoogle Scholar
  27. De Grauwe, P. (1996) “Inflation convergence during the transition to EMU.” in P. De Grauwe, S. Miscosi and G. Tullio (eds) Inflation and wage behavior in Europe. Clarendon Press, 193–208.Google Scholar
  28. Dombusch, R., C.A. Favero and F. Giavazzi. (1998) “A red letter day?” CEPR working paper 1804.Google Scholar
  29. Eijffinger S.C.W. and J. De Haan. (1996) “The political economy of central bank independence.” Special Papers in International Economics 19, Princeton University.Google Scholar
  30. Eijffinger, S.C.W., E. Schaling and M. Hoeberichts. (1998) “Central bank independence: a sensitivity analysis.” European Journal of Political Economy, 73–88.Google Scholar
  31. European Monetary Institute. (1998) Convergence report. EMI, Frankfurt.Google Scholar
  32. Fagan G. and J. Henry. (1998) “Long run money demand in the EU: evidence for area-wide aggregates.” Empirical Economics 23, 483–506.CrossRefGoogle Scholar
  33. Fase, M.M.G. and C.C.A. Winder. (1994) “Money demand within EMU - an analysis with the divisia measure.” De Nederlandse Bank Quarterly Bulletin, September, 25–55.Google Scholar
  34. Fase, M.M.G. and C.C.A. Winder. (1997) “Wealth and the demand for money in the European Union.” De Nederlandse Bank Staff Reports, 6.Google Scholar
  35. Fatas, A. (1997) “EMU: countries or regions? Lessons from the EMS experience.” European Economic Review 41, 3–5, 743–751.Google Scholar
  36. Friedman, M. (1977) “Nobel lecture: inflation and unemployment.” Journal of Political Economy 85, 451–472.CrossRefGoogle Scholar
  37. Giannini, C. and C. Monticelli. (1997) “Which TARGET for monetary policy in stage three? Issues in the shaping of the European payment system.” Weltwirtschaftliches Archiv 133, 657–682.CrossRefGoogle Scholar
  38. Giovannetti, G. and R. Marimon. (1998) “An EMU with different transmission mechanisms?” paper presented at the ZEI conference.Google Scholar
  39. Grier, K.B., and M.J. Perry. (1998) “On inflation and uncertainty in the G7 countries.” Journal of International Money and Finance 17, 671–689CrossRefGoogle Scholar
  40. Groeneveld, J.M. (1998) Inflation patterns and monetary policy, lessons for the European Central Bank. Edward Elgar.Google Scholar
  41. Gros, D. and N. Thygesen. (1998) European monetary integration. Longman Harlow.Google Scholar
  42. Hayo, B. (1999) “Estimating a European Demand for Money.” Scottish Journal of Political Economy, forthcoming.Google Scholar
  43. Hayo, B., and B. Uhlen crock. (1998) “Sectoral effects of monetary policy in Germany.” paper presented at the ZEI conference.Google Scholar
  44. Hughes Hallett, A.J. ant T. Warmedinger. (1998) “On the asymmetric impacts of a common monetary policy.” paper presented at the ZEI conference.Google Scholar
  45. Kashyap, A.K., and J.0 Stein. (1997) “The role of banks in monetary policy: a survey with implications for the European mont Ty union.” Economic Perspectives Federal Reserve Bank of Chicago, 2–18.Google Scholar
  46. Kneeshaw, J.T. (1995) “A survey of non-financial sector balance sheets in industrialised countries: implications for the mot etary policy transmission mechanism.” BIS working paper 25.Google Scholar
  47. Kremers, J.J.M. and T.1). Lane. (1990) “Economic and monetary integration and the aggregate demand for money in the EMS.” IMF Staff Papers 37, 777–805.CrossRefGoogle Scholar
  48. Krugman, P. (1993) “Li, ssons of Massachusetts for EMU.” in Tones and Giavazzi, eds. Adjustment and growth in the European monetary union. Cambridge University Press.Google Scholar
  49. La Cour, L. and R. Mac Donald. (1997) “Modelling the ECU against the US dollar: a structural monetary interpretation.” Discus: ion Paper, no. 2, Centre for Financial Markets Research, University of Strathclyde.Google Scholar
  50. Läufer, N.K.A. (1992) “A monetary policy for unified Germany: europeanization of money supply targeting.” in H.-J. Vos,,;erau, (ed) European integration in the world economy. Springer-Verlag, Berlin, 46–70.Google Scholar
  51. Lemmen, J. (1998) “a, anaging government default risk.” mimeo Financial Markets Group, London School of Economics.Google Scholar
  52. Magill, M. and M. Quin iii. (1996) Theory of incomplete markets. MIT Press, Cambridge.Google Scholar
  53. Minford, P. and E. Nov ell. (1998) “Nominal contracts as behaviour towards risk.” paper presented at the 1997 Konstanz Seminar on Monetary Policy.Google Scholar
  54. Missale, A. and O.J. Blanchard. (1994) “The debt burden and debt maturity.” American Economic Review, 309–319.Google Scholar
  55. Modigliani, F. and M Miller. (1958) “The cost of capital, corporation finance, and the theory of investment.” American. îconomic Review 48, 261–297.Google Scholar
  56. Monticelli, C. and M-C Strauss-Kahn. (1993) “European integration and the demand for broad money.” The Manchester School of Economic and Social Studies 61, 345–366.CrossRefGoogle Scholar
  57. Monticelli, C. (1996) “I U-wide money and cross-border holdings.” Weltwirtschaftliches Archiv 132, 215235.Google Scholar
  58. Persson, M., T. Persson and L.E.O. Svensson. (1987) “Time consistency of fiscal and monetary policy.” Econometrica, 1419–1412.Google Scholar
  59. Rother, P.C. (1998) “Et ropean monetary integration and the demand for money.” Journal of International Money and Finance 17, 691–711.CrossRefGoogle Scholar
  60. Spencer, P. (1997) “Monetary integration and currency substitution in the EMS: the case for a European monetary aggregate.” E Iropean Economic Review 41, 1403–1419.CrossRefGoogle Scholar
  61. Stiglitz, J. and A.M. Vr eiss. (1981) “Credit rationing in markets with imperfect information.” American Economic Review, 393–110.Google Scholar
  62. Svensson, L.E.O. (199’’) “Inflation forecast targeting: implementing and monitoring inflation targets.” European Economic Review 41, 1111–1146.Google Scholar
  63. Tullio, G., E. De Souza, and P. Giucca. (1996) “The demand for money functions in Europe and in Germany before and after the fall of the Berlin Wall.” in P. De Grauwe, S. Miscosi and G. Tullio (eds) Inflation and wage behavior in Europe. Clarendon Press, 310–337.Google Scholar
  64. Wesche, K. (1997) “The demand for divisia money in a core monetary union.” Federal Reserve Bank of St. Louis Review 79, 5, 51–60.Google Scholar

Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  1. 1.Tinbergen Institute & NIASNijenrode University; Erasmus University RotterdamThe Netherlands

Personalised recommendations