Empirical Evidence on Asymmetric Monetary Transmission in Europe

Abstract

The theoretical models in the previous chapters illustrated that the partial sources of asymmetric monetary transmission in Europe identified in Chapter 2 do not easily map into differences in the overall strength of monetary transmission. This chapter reviews the empirical evidence on asymmetries in the overall effects of monetary policy in Europe. In view of the importance for the ECB policy-making, numerous studies have produced a large and quickly growing body of empirical evidence on asymmetric monetary transmission in Europe. While the following presentation and discussion provides an overview of different approaches and results, it concentrates on four countries: France, Germany and Italy as the most important EMU member countries, which taken together account for almost three quarters of aggregate European output and on the UK, which is the most important outsider.