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|Title:||Asymmetric monetary policy effects in Germany |
Kuzin, Vladimir N.
|Issue Date:||2004 |
|Series/Report no.:||DIW-Diskussionspapiere 397|
|Abstract:||In a small structural model we find asymmetries in the effects of monetary policy in Germany depending on whether the economy is in an upswing or a downswing. These two different regimes are also identified using a Markov-switching model and the Kalman filter. Our results indicate that the effects of monetary policy are significantly higher in a downswing than in an upswing. It follows not only that monetary policy has to raise interest rates markedly if an economy is overheating but also that once a downturn is discernible, interest rates have to be lowered rapidly so as to prevent an overly large reaction of the real economy.|
|Document Type:||Working Paper|
|Appears in Collections:||DIW-Diskussionspapiere|
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