International Journal of Business and Economics Volume 1, No. 2 August, 2002

Regional Effects of Monetary Policy in the Netherlands

Ivo J. M. Arnold

Center for Finance, Universiteit Nyenrode, The Netherlands

Evert B. Vrugt

Center for Finance, Universiteit Nyenrode, The Netherlands

Abstract

This paper measures the impact of monetary policy shocks on regional and sectoral output in the Netherlands for the period 1973 to 1993. We document large regional and sectoral variation in monetary policy transmission. Our results support previous findings that the differential regional effects of monetary policy are significantly related to industrial composition. We also find that sectoral effects account for much more of the variation in interest sensitivity than regional effects. Finally, we explore whether sectors which react more strongly to interest rate shocks are compensated by higher returns.

Keywords：monetary transmission, sectoral effects, regional effects.

JEL Classifications：E50, R10.

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