The results from structural VARs for the euro area are in line with the findings based on data from the United States and elsewhere. 4 Peersman and Smets, in a volume devoted to the transmission of monetary policy in the euro area, 5 find that an increase in the interest rate is followed by a fall in output after about two quarters.
The effect on output is strongest after about three to five quarters. The price level responds even more sluggishly than output. Furthermore, it appears that the price level responds more slowly in the euro area compared with the United States.