Hidden Bibliographic Details
| Other authors / contributors: | Sanjani, Marzie Taheri, author.
International Monetary Fund. European Department.
International Monetary Fund. Research Department.
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| ISBN: | 1513512862
9781513512860
1513573861
9781513573861
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| Notes: | "July 2015."
"European Department and Research Department."
Includes bibliographical references (pages 43-45).
Online resource; title from pdf title page (IMF.org Web site, viewed July 15, 2015).
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| Summary: | We suggest a new approach for analyzing the role of financial variables and shocks in computing the output gap. We estimate a two-region DSGE model for the euro area, with financial frictions at the household level, between 2000-2013. After joining the monetary union, a decline in some countries' borrowing costs contributed to a credit, housing and real boom and bust cycle. We show that financial frictions amplified economic fluctuations and the measure of the output gap in those countries. On the contrary, in countries such as France and Germany, financial frictions played a minor role in output gap measures. We also present evidence of the trade-offs faced by the European Central Bank when trying to stabilize two regions in a currency union with unsynchronized economic cycles. --Abstract.
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| Other form: | Print version: 9781513512860
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| Standard no.: | 10.5089/9781513512860.001
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