Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/19500 
Authors: 
Year of Publication: 
2004
Series/Report no.: 
Discussion Paper Series 1 No. 2004,33
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
As of today, estimating interest rate reaction functions for the Euro Area is hampered by the short time span since the conduct of a single monetary policy. In this paper we circumvent the common use of aggregated data before 1999 by estimating interest rate reaction functions based on a panel including actual EMU Member States. We find that exploiting the cross-section dimen- sion of a multi-country panel and accounting for cross-country heterogeneity in advance of the single monetary policy pays off with regard to the estimated reaction functions' ability to describe actual interest rate dynamics. We retrieve a panel reaction function which is demonstrated to be a valuable tool for evaluating episodes of monetary policy since 1999.
Subjects: 
Monetary Policy
Reaction Function
Euro Area
Panel Data
JEL: 
E43
E58
C33
Document Type: 
Working Paper

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