This is a study of the transmission of monetary policy to macroeconomic variables with structural time-varying coefficient vector autoregressions in the Czech Republic, Hungary and Poland, in comparison with that in the euro area. The results presented in this working paper indicate that the impact on output of a monetary shock changed over time. At the point of the last observation of our sample, the fourth quarter of 2011, among the three countries, monetary policy was most powerful in Poland and not much less strong than the transmission in the euro area.
Monetary transmission in three central European economies: evidence from time-varying coefficient vector autoregressions
by Zsolt Darvas on 2nd May 2012
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Propping up Europe?
24th April 2012
The Bank of England, the Federal Reserve (Fed) and the European Central Bank (ECB) have responded to the crisis with exceptional initiatives resulting in a major increase in their balance sheets. This Policy Contribution suggests that underlying structural problems relating to banks, the macroeconomic adjustment and the euro area’s governance need to be addressed before financial stability and economic growth can return. Monetary policy cannot fundamentally address these problems and is made less effective by economic/institutional heterogeneity.
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The messy rebuilding of Europe
30th March 2012
The euro crisis and subsequent policy responses have challenged the assumptions underpinning the euro-area's governance, and the relationship between the European Union's euro and non-euro countries. As more steps are taken in response to the weaknesses in the euro policy regime revealed by the crisis, the EU will face new challenges of the same sort. This Policy Brief provides input to the policy discussion on the governance of the EU/euro area relationship.
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Sudden stops in the euro area
29th March 2012
There is a view that the euro crisis is a balance-of-payments crisis at least as much as a fiscal crisis.The balance-of-payments discussion lacks clarity, however. First, it seems awkward to speak of balance-of-payments crises within a monetary union that was designed to make such crises impossible. Second, few of the proponents of the balance-of-payments crisis view have substantiated their claims with clear evidence. Unlike a standard balance-of-payments crisis, within the euro area, current-account deficits have adjusted partially and slowly. Third, the relationship between TARGET2 balances and balance-of payment imbalances remains confused. The purpose of this paper is to fill these gaps.
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Are banks affected by their holdings of government debt?
26th March 2012
This Working Paper sheds light on the link between sovereign and banking risk in the euro zone. It provides an empirical analysis of the impact of government debt holdings on the stock market performances of the European banks stress tested in the EBA’s July and December 2011 exercises.
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Real effective exchange rates for 178 countries: a new database
15th March 2012
Using data on exchange rates and consumer price indices and a weighting matrix, we calculate up-to-date consumer price index-based REER (the real effective exchange rate) for 178 countries – many more than in any other publicly available database – plus for the euro area. The database will be irregularly updated.
