I estimate the dynamic effects of respectively traditional interest rate
innovations and unconventional monetary policy actions on the Euro area
economy. The results show that the Eurosystem can stimulate the economy
beyond the policy rate by increasing the size of its balance sheet. The ultimate
consequences on output and consumer prices are however more sluggish
compared to interest rate innovations. Furthermore, the transmission
mechanism via financial institutions - very likely the risk-taking channel - turns
out to be different.