The effect of monetary policy shocks on macroeconomic variables: Evidence from the Eurozone

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This paper investigates how European Central Bank (ECB) monetary policy shocks impact industrial production (output) and inflation (prices). I gather a novel dataset of macroeconomic forecasts, and using a narrative approach, I construct a new measure of monetary policy shocks. Industrial production responds to an unpredictable positive monetary policy shock of 100 basis points with a decline of over 0.5%. On the contrary, inflation responds weakly with a very modest decrease of 0.05%.
Original languageEnglish
Article number108803
JournalEconomics Letters
Early online date5 Nov 2019
Publication statusPublished - Jan 2020


  • Macroeconomic forecasts
  • Monetary policy
  • Narrative identification

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