Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307372 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11442
Publisher: 
CESifo GmbH, Munich
Abstract: 
This paper investigates the relationship between economic divergence and expansionary monetary policies within the eurozone based on a new divergence indicator. We study the dynamics between the economic divergence of member states and unconventional monetary policy in a Bayesian SVAR and find a strong positive response of the expansion of the ECB's balance sheet to rising divergence. We find weaker evidence for unconventional monetary policies lowering divergence. We interpret these findings as evidence that expansionary monetary policy aims to absorb shocks leading to divergence. However, it may exacerbate divergence and inflationary pressures in the long-run. This research contributes to the literature on Optimum Currency Areas (OCAs) by highlighting the dynamics between economic disparities and unconventional monetary policy.
Subjects: 
optimum currency areas
unconventional monetary policy shocks
statistical identification
JEL: 
E52
E58
F15
F45
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.