Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18094
Authors: 
Tober, Silke
Kuzin, Vladimir N.
Year of Publication: 
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.
Subjects: 
Asymmetry
monetary policy
Markov switching
structural model
JEL: 
E44
E5
E32
C32
C51
Document Type: 
Working Paper

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