Abstract
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 language | English |
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Article number | 108803 |
Journal | Economics Letters |
Volume | 186 |
Early online date | 5 Nov 2019 |
DOIs | |
Publication status | Published - Jan 2020 |
Keywords
- IDENTIFICATION
- Macroeconomic forecasts
- Monetary policy
- Narrative identification