Comparing conventional and unconventional monetary policy effects in the euro area and the United States

We use a consistent framework to compare the macroeconomic effects of conventional and unconventional monetary policy in the euro area (EA) and the United States (US). We find that monetary policy has a stronger effect on prices for the conventional policy period. We interpret this result by the lower level of the natural rate of interest during the unconventional policy period. At the same time, the effects of monetary policy on the unemployment rate and financial variables are more comparable between the conventional and the unconventional policy periods. We also find that the effectiveness of unconventional monetary policy in terms of its target impact is lower in the EA than in the US, a result we attribute to differences in central bank institutional design.