De Economist

, Volume 147, Issue 2, pp 183–203 | Cite as

Measuring Monetary Conditions in Europe: Use and Limitations of the MCI

  • Marga Peeters


The Monetary Conditions Index is a composite index of interest and exchange rates frequently used by (central) banks, the IMF, and the OECD. This paper considers the benefits and weaknesses of the MCI in the light of large macroeconometric models. It follows that the impact of the exchange rate on GDP relative to the impact of the short-term interest rate is substantially lower under a monetary union. For most countries, including a long-term interest rate in the MCI only affects the level of the MCI and not its turning points.


Exchange Rate Interest Rate International Economic Public Finance Turning Point 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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© Kluwer Academic Publishers 1999

Authors and Affiliations

  • Marga Peeters

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