NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monetary policy in Europe vs the US: what explains the difference?

Harald Uhlig

NBER Working Paper No. 14996
Issued in May 2009
NBER Program(s):   EFG   ME

This paper compares monetary policy in the US and EMU during the last decade, employing an estimated hybrid New Keynesian cash-in-advance model, driven by five shocks. It appears that the difference between the two monetary policies between 1998 and 2006 is due to both surprises in productivity as well as surprises in wage demands, moving interest rates in opposite directions in Europe and the US, but not due to a more sluggish response in Europe to the same shocks or to different monetary policy surprises.

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Document Object Identifier (DOI): 10.3386/w14996

Published: Monetary Policy in Europe versus the United States: What Explains the Difference?, Harald Uhlig. in International Dimensions of Monetary Policy , GalĂ­ and Gertler. 2009

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