20 years of common European monetary policy: Reasons to celebrate

Artikel

Twenty years after the introduction of the euro, this Weekly Report uses an empirical analysis to assess the performance of monetary policy in the EMU founding states. It is often claimed that the monetary policy of the European Central Bank (ECB) cannot outperform its national predecessors, as the euro area countries experience different business cycles yet share a common interest rate. However, the present analysis shows that the ECB's common monetary policy has been more adept at stabilizing the economy than most of its national predecessors from the perspective of the member states. With a common currency, European monetary policy has also become largely independent of exchange rates. However, the central bank is unable to counter long-term macroeconomic imbalances. To protect euro area countries from crises more effectively, priority should be given to reforming the monetary union and fiscal policy as well as to completing the Banking Union and the Capital Markets Union. Mistakes in crisis management must be openly discussed in order to address the temptation some have to renationalize economic and monetary policy; the ECB's monetary policy should not be a scapegoat.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: DIW Weekly Report ; ISSN: 2568-7697 ; Volume: 9 ; Year: 2019 ; Issue: 20/21 ; Pages: 179-187 ; Berlin: Deutsches Institut für Wirtschaftsforschung (DIW)

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Monetary Policy ; Macroeconomic Issues of Monetary Unions
• Subject: Economic and Monetary Union ; ECB ; Euro Area ; Structural Vector Autoregressions ; Monetary Policy Stress ; Sign Restrictions ; Heteroskedasticity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fritsche, Jan Philipp ; Harms, Patrick Christian
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2019

Further information

• DOI: doi:10.18723/diw_dwr:2019-20-1
• Handle: http://hdl.handle.net/10419/197979
• Last update: 10.03.2025, 11:43 AM CET