What can be learned by discerning the similarities and the differences in monetary policy on either side of the Atlantic? Specifically, what insights does the American experience provide for the European monetary union? And what idiosyncrasies of the euro area might require it to chart its own course? To me, the comparison might prove instructive with regard to three dimensions in particular.
First, the US is further along in its business cycle, and therefore its monetary policy cycle, than the euro area. But while this is a difference, it may actually allow us to look out for possible similarities – similarities in terms of the appropriate point in time to normalise monetary policy. Second, the institutional set-ups of the US and European currency areas differ.