Is the Effect of Monetary Policy changing in the Eurozone?

The deflationary trend of the Eurozone suggests a decrease in effectiveness of the European Central Bank`s policy. In this paper the effectiveness of monetary policy is compared to see whether it has changed. To do so, first the functioning of the European monetary system is clarified. Subsequently, causes for change in its dynamics are discussed. This is followed by an empirical research comparing two 4-dimensional vector autoregression models in two different periods. The first period is directly before the crisis of 2008 and the other startsfrom 2013. The results are evaluated using impulse response functions. No evidence is found that the effectiveness of the ECB has changed, indicating that the effect of monetary policy remained the same