The Effects of Monetary Policy in the Euro Area: First Results from the Flow of Funds

摘要: This paper provides new evidence on the transmission of monetary policy in euro area, assessing effects a tightening lending and borrowing activities households, firms other economic sectors. I exploit, for first time, information content flow-of-funds statistics, representing most complete framework analysing flows funds moving from one sector (the lender) to borrower). estimate parsimonious recursive VAR order identify shocks area. Its predictions as responses main aggregates are line both with existing literature theoretical priors shock should produce, without suffering empirical puzzles that can be found some previous works. The benchmark model is then extended include variables. find certain degree inertia firms’ behaviour. In fact, following increase net raised at impact. Households adjust their financial investment attitude quite rapidly after shock, reducing overall accumulation assets switching deposits mutual fund shares short-term securities. Special attention devoted impact loans private sector. As studies euro-area economy, we an interest-rate hike followed by granted households short run. result, which anyway not counter-intuitive it may look, vanishes when only bank taken into account analysis.