Do Euro Area Countries Respond Asymmetrically to the Common Monetary Policy?

We investigate the possible existence of asymmetries among Euro Area countries reac- tions to the European Central Bank monetary policy. Our analysis is based on a Struc- tural Dynamic Factor model estimated on a large panel of Euro Area quarterly variables. Although the introduction of the euro has changed the monetary transmission mechanism in the individual countries towards a more homogeneous response, we find that differences still remain between North and South Europe in terms of prices and unemployment. These results are the consequence of country-specific structures, rather than of European Central Bank policies.