Monetary transmission right from the start
Abbassi, Puriya ;  Nautz, Dieter ;  ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleMonetary transmission right from the start
Subtitlethe (dis)connection between the money market and the
ECB’s main refinancing rates
AuthorAbbassi, Puriya
AuthorNautz, Dieter
EditorUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages21 S.
Series ; 2010,7 : Economics
KeywordsFinancial Crisis; Monetary transmission process; Central bank auctions; European Central Bank; Money markets
Classification (DDC)339 Macroeconomics and related topics
AbstractThe relation between the ECB’s main refinancing (MRO) rates and the money market is key
for the monetary transmission process in the euro area. This paper investigates how money
market rates respond to the new information revealed by MRO auctions. Our results confirm
a stabilizing level relationship between the overnight rate Eonia and MRO rates before the
financial crisis. Since the start of the financial crisis, however, we find that MRO auction outcomes
even exacerbated the disconnection of money market rates from the policy-intended
interest rate level. These findings support the fixed rate full allotment policy introduced by
the ECB as an unconventionalmeasure to re-stabilize banks’ refinancing conditions.
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Institut für Statistik und Ökonometrie
Year of publication2010
Type of documentBook
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Created at2010-05-03 : 11:36:15
Last changed2016-01-05 : 02:38:18
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000005382