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The Output Composition Puzzle: A Difference in the Monetary Transmission Mechanism in the Euro Area and the United States

In: Banking Market Structure and Monetary Policy

Author

Listed:
  • Ignazio Angeloni

    (European Central Bank)

  • Anil K Kashyap

    (National Bureau of Economic Research)

  • Benoît Mojon

    (Banque de France)

  • Daniele Terlizzese

    (Banca d'Italia)

Abstract

We revisit recent evidence on how monetary policy affects output and prices in the U.S. and in the euro area. The response patterns to a shift in monetary policy are similar in most respects, but differ noticeably as to the composition of output changes. In the euro area investment is the predominant driver of output changes, while in the U.S. consumption shifts are significantly more important. We dub this difference the output composition puzzle and explore its implications and several potential explanations for it.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ignazio Angeloni & Anil K Kashyap & Benoît Mojon & Daniele Terlizzese, 2004. "The Output Composition Puzzle: A Difference in the Monetary Transmission Mechanism in the Euro Area and the United States," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Antonio Ahumada & J. Rodrigo Fuentes & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking Market Structure and Monetary Policy, edition 1, volume 7, chapter 3, pages 059-120, Central Bank of Chile.
    • Handle: RePEc:chb:bcchsb:v07c03pp059-120
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    References listed on IDEAS

    as
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