NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Output Composition Puzzle: A Difference in the Monetary Transmission Mechanism in the Euro Area and U.S.

Ignazio Angeloni, Anil K. Kashyap, Benoit Mojon, Daniele Terlizzese

NBER Working Paper No. 9985
Issued in September 2003
NBER Program(s):   EFG   ME

We revisit recent evidence on how monetary policy affects output and prices in the U.S. and in the euro area. The response patterns to a shift in monetary policy are similar in most respects, but differ noticeably as to the composition of output changes. In the euro area investment is the predominant driver of output changes, while in the U.S. consumption shifts are significantly more important. We dub this difference the output composition puzzle and explore its implications and several potential explanations for it. While the evidence seems to point at differences in consumption responses, rather than investment, as the proximate cause for this fact, the source of the consumption difference remains a puzzle.

download in pdf format
   (514 K)

email paper

This paper is available as PDF (514 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9985

Published: Angeloni, Ignazio, Anil K. Kashyap, Benoit Mojon and Daniele Terlizzese. "The Output Composition Puzzle: A Difference In The Monetary Transmission Mechanism In The Euro Area And The United States," Journal of Money, Credit and Banking, 2003, v35(6,Dec), 1265-1306.

Users who downloaded this paper also downloaded these:
Boivin, Kiley, and Mishkin w15879 How Has the Monetary Transmission Mechanism Evolved Over Time?
Angeloni, Kashyap, Mojon, and Terlizzese w9984 Monetary Transmission in the Euro Area: Does the Interest Rate Channel Explain it All?
MacGarvie and Furman w11470 Early Academis Science and the Birth of Industrial Research Laboratories in the U.S. Pharmaceutical Industry
Henderson and Kuncoro w12110 "Sick of Local Government Corruption? Vote Islamic"
Favero, Giavazzi, and Flabbi w7231 The Transmission Mechanism of Monetary Policy in Europe: Evidence from Banks' Balance Sheets
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us