Monetary Policy in Europe vs the Us: What Explains the Difference?

Uhlig, Harald

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Monetary Policy in Europe vs the Us: What Explains the Difference?

NBER Working Paper No. w14996

64 Pages Posted: 26 May 2009 Last revised: 24 Dec 2022

See all articles by Harald Uhlig

Harald Uhlig

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 2009

Abstract

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.

Suggested Citation: Suggested Citation

Uhlig, Harald, Monetary Policy in Europe vs the Us: What Explains the Difference? (May 2009). NBER Working Paper No. w14996, Available at SSRN: https://ssrn.com/abstract=1408916