Transmission of monetary policy in Europe: comparative analyses of Germany, France, Italy and the United Kingdom.

Summary The thesis proposes a study of the transmission mechanisms of monetary policy in Europe. We show that the transmission is determined by the institutions of each country. We assess the homogeneity of transmission in the future member countries of the EMU. This investigation is essentially empirical and proceeds in several steps. Prior to the comparison, we define monetary policy as the discrete action of monetary authorities on the interbank market interest rate. We show that France has strictly followed the German monetary policy since 1987. Then, we focus on the transmission mechanisms of monetary policy to the real economy. We base our study on the four major European countries, Germany, France, Italy and the United Kingdom, over the period 1975 to 1994. In the second chapter, we present the role of financial structures in the transmission channels of monetary policy, which allows us to identify criteria for comparing the German, French, Italian and British financial structures for the implementation of the single monetary policy. In the third chapter, empirical evaluations of various models show that the expected effects of a monetary policy shock do not necessarily go through the same transmission channels in different countries. However, the overall effects of monetary policy shocks on final output and price targets are relatively consistent across the four countries. The fourth chapter focuses on the role of the labor market in the transmission of final demand changes to inflation. Our results show the possibility of a trade-off between inflation and unemployment, including in the long run. Above all, they show that the cost in terms of unemployment of disinflation policies has increased in Germany, France, Italy and the United Kingdom over the last fifteen years. This increase is particularly dramatic in France. Finally, the fifth chapter proposes to explain why the yield curve has been a good leading indicator of activity in Europe for the last 25 years.