ECB Monetary Policy Transmission Mechanism
Marc Chandler | Jun 17, 2013 12:18AM ET
A couple of weeks ago, we posted a graph that depicted the transmission mechanism of US monetary policy. We follow up that with a Great Graphic of how the ECB understands the transmission mechanism of its monetary policy.
A compare and contrast essay of the two is stuff that a dissertation is made of. For our purposes here, note that the output for the ECB is price developments. For US monetary policy it is aggregate demand.
Many of the components and factors are indeed the same, though the Federal Reserve has a more significant role for policy communication and commitment.
Perhaps from another perspective, the US transmission mechanism is about what policy can do, while the ECB's transmission mechanism seems more to do with the limits of monetary policy.
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