Regional Effects of Monetary Policy in the Netherlands

Abstract

This paper measures the impact of monetary policy shocks on regional and sectoral out-put 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 dif-ferential regional effects of monetary policy are significantly related to industrial composi-tion. We also find that sectoral effects account for much more of the variation in interest sen-sitivity than regional effects. Finally, we explore whether sectors which react more strongly to interest rate shocks are compensated by higher returns. Key words: monetary transmission; sectoral effects; regional effects JEL classification: E50; R10 1.