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The output composition puzzle: a difference in the monetary transmission mechanism in the euro area and United States
We revisit recent evidence on how monetary policy affects output and prices in the U.S. and in the euro area. The response patterns to a shift in monetary policy are similar in most respects, but differ noticeably as to the composition of output changes. In the euro area investment is the predominant driver of output changes, while in the U.S. consumption shifts are significantly more important. We dub this difference the output composition puzzle and explore its implications and several potential explanations for it.
AUTHORS: Angeloni, Ignazio; Kashyap, Anil K.; Mojon, Benoit; Terlizzese, Daniele
Will a common European monetary policy have asymmetric effects?
This article reviews the evidence on differences in the transmission of monetary policy across European countries. The authors argue that the existing evidence, based almost exclusively on macroeconomic data, does not allow one to decide whether a common monetary policy will have asymmetric effects. A first peek at microeconomic data suggests this may be a promising route for further work.
AUTHORS: Guiso, Luigi; Kashyap, Anil K.; Panetta, Fabio; Terlizzese, Daniele