The single monetary policy and domestic macro-fundamentals: Evidence from Spain

  title={The single monetary policy and domestic macro-fundamentals: Evidence from Spain},
  author={M. Arghyrou and M. Gadea},
  journal={Journal of Policy Modeling},
  • M. Arghyrou, M. Gadea
  • Published 2008
  • Economics
  • Journal of Policy Modeling
  • We model pre-euro Spanish monetary policy and use our findings to assess the compatibility of the interest rates set by the ECB since 1999 with Spanish macro-fundamentals. We find that in the 1990s Spain implemented successfully a monetary strategy tailored to its own domestic fundamentals; and by abolishing it to join the euro she has paid a cost in the form of a sub-optimal monetary policy. Our findings suggest that the present turmoil in the market for Spanish government bonds is symptomatic… CONTINUE READING
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