The Impact of ECB Policy on Structural Reforms

Aufsätze referiert extern - Web of Science

Malte Rieth, Jana Wittlich

In: European Economic Review 122 (2020), 103361, 20 S.


We estimate the impact of monetary policy on structural reform adoption in the euro area. We identify exogenous ECB policy changes through an event study that extracts the unexpected variation in euro area interest rates on policy announcement days. We find that surprise monetary expansions increase the number of reforms significantly and that the effect is stronger for countries with weaker macroeconomic fundamentals or tighter public budget constraints. These findings are consistent with the hypothesis that expansionary monetary policy, by attenuating the short-run costs of reforms and increasing governments’ financial leeway, spurs competition‐friendly supply-side policy.

Malte Rieth

Research Associate in the Macroeconomics Department

JEL-Classification: C23;E52;E58;P11
Keywords: Macroeconomic policy, Euro area, Event study, Panel data