The Transmission of Monetary Policy and Technology Shocks in the Euro Area

Abstract

This paper analyzes the response of a set of euro area macroeconomic variables to monetary policy and technology shocks based on structural VARs. The data set runs from 1970Q1 until 2006Q4 and includes a novel long-run series for hours worked per capita in the euro area. We find that real macroeconomic variables follow a hump-shaped response after monetary policy shocks and jump on impact after technology shocks. We also provide evidence that hours worked fall after a positive technology shock. These conclusions are robust to different sample periods and specifications of the variables.