Peter van Els

NEW MACROECONOMIC EVIDENCE ON MONETARY POLICY TRANSMISSION IN THE EURO AREA

This paper presents some new macroeconomic evidence on the transmission mechanism of monetary policy in the euro area. The evidence is drawn from a number of collaborative research projects undertaken by the ECB and the National Central Banks (NCBs) of the euro area and utilizes a variety of national and euro area aggregate VAR and structural macroeconomic models. A qualitatively similar pattern of results following a monetary policy shock is observed across models, with the maximum output effect typically occurring after 1-2 years. Price effects are somewhat slower to materialize and are more persistent. According to both sets of results, investment is the main (domestic) contributor to the drop in real GDP. This contrasts with findings for the United States where consumption plays a dominant role in the transmission process. Finally, structural macroeconomic models predict that if the exchange rate moves in line with an Uncovered Interest Parity (UIP) condition, the short-run output and price effects are largely driven by the exchange rate channel. (JEL: C50, C52, E52, E17, E5) Copyright (c) 2003 The European Economic Association.

Labour hoarding in a disequilibrium model of the Dutch labour market

SummaryThis paper presents a method to integrate labour hoarding into a disequilibrium model of the labour market. Disequilibrium indicators for the labour market that include labour hoarding are constructed. These indicators, being important determinants of policy multipliers with respect to employment, are found to be less volatile than the corresponding disequilibrium indicators for the goods market which are available from business surveys. The lower volatility reflects the role of labour hoarding as a buffer between actual and efficient employment levels. Our results indicate that labour hoarding in Dutch enterprises ranges from a minimum of 0.5 per cent of employment in early 1985 to a maximum of 7.0 per cent in 1975. Furthermore, the paper pays special attention to the modelling of mismatch unemployment and to the simulation results of an empirical disequilibrium macromodel of the Dutch economy.