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Monetary Shocks and the Asymmetric Adjustment of Uk Regional Output

Author

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  • Mark J Holmes

    (Department of Economics, Loughborough University, Loughborough, Leicestershire LE11 3TU, England)

Abstract
Evidence from the OECD economies suggests that real output responds asymmetrically to equivalent positive and negative monetary shocks where contractionary shocks exert the stronger influence on real output. With the aid of annual data over a twenty-five-year period, the author examines whether this is the case for twelve UK regions. In the study he also incorporates recent theoretical arguments which predict that the degree of asymmetry to demand shocks is sensitive to trend inflation. Seemingly unrelated regression analysis suggests that there are significant differences in the nature of asymmetries across the regions, where inflation offers a limited contribution to the degree of asymmetry experienced.

Suggested Citation

  • Mark J Holmes, 2000. "Monetary Shocks and the Asymmetric Adjustment of Uk Regional Output," Environment and Planning C, , vol. 18(6), pages 667-680, December.
    • Handle: RePEc:sae:envirc:v:18:y:2000:i:6:p:667-680
    DOI: 10.1068/c9954
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    References listed on IDEAS

    as
    1. Maurice Obstfeld & Giovanni Peri, 1998. "Regional non-adjustment and fiscal policy," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 206-259.
    2. N. Gregory Mankiw & David Romer (ed.), 1991. "New Keynesian Economics - Vol. 1: Imperfect Competition and Sticky Prices," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262631334, April.
    3. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    4. Karras, Georgios, 1996. "Are the Output Effects of Monetary Policy Asymmetric? Evidence from a Sample of European Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 267-278, May.
    5. Simon Hall & Anthony Yates, 1998. "Are there downward nominal rigidities in product markets?," Bank of England working papers 80, Bank of England.
    6. James Peery Cover, 1992. "Asymmetric Effects of Positive and Negative Money-Supply Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1261-1282.
    7. Gordon Hughes & Barry McCormick, 1991. "Housing Markets, Unemployment and Labour Market Flexibility in the U.K," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 83-114, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Zeyyad Mandalinci, 2015. "Effects of Monetary Policy Shocks on UK Regional Activity: A Constrained MFVAR Approach," Working Papers 758, Queen Mary University of London, School of Economics and Finance.
    2. Ageliki Anagnostou & Stephanos Papadamou, 2016. "Regional asymmetries in monetary policy transmission: The case of the Greek regions," Environment and Planning C, , vol. 34(5), pages 795-815, August.

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