DP8944 Money, credit, monetary policy and the business cycle in the euro area

Author(s): Domenico Giannone, Michele Lenza, Lucrezia Reichlin
Publication Date: April 2012
Keyword(s): euro area, loans, monetary policy, Money, non-financial corporations
JEL(s): C32, C51, E32, E51, E52
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8944

This paper uses a data-set including time series data on macroeconomic variables, loans, deposits and interest rates for the euro area in order to study the features of financial intermediation over the business cycle. We find that stylized facts for aggregate monetary and real variables are remarkably similar to what has been found for the US by many studies while we uncover new facts on disaggregated loans and deposits. During the crisis the cyclical behavior of short term interest rates, loans and deposits remain stable but we identify unusual dynamics of longer term loans, deposits and longer term interest rates.