Empirical benchmarks for ESCB models: A quantitative assessment of the macroeconomic impact of the 2022-23 monetary policy tightening
Alina Bobasu | European Central Bank (ECB)
Matteo Ciccarelli | European Central Bank (ECB)
Sebastian Gechert | Technische Universität Chemnitz
Franz Prante | Technische Universität Chemnitz
Abstract
In this policy note, drawing on a recent ECB Occasional Paper (November 2025, No. 377) and an independent meta-analysis on the effectiveness of monetary policy, we cross-check the ESCB’s workhorse models against selected empirical evidence. We address two central questions: first, what is the effect of a standard monetary policy shock on macroeconomic variables according to ESCB models, and how does this compare to findings from the empirical (mostly VAR-based) literature? Second, what has been the effect of the 2021–23 monetary policy tightening through the lens of these results? To answer the first question, we compare the findings of a recent meta-analysis of more than 400 empirical studies with a common simulation exercise conducted across several ESCB models. The results show that the size, dynamics and persistence of model-based and empirical responses are broadly similar. However, DSGE models tend to imply stronger effects—particularly on inflation—while semi-structural models are closer to the empirical benchmarks, reflecting their richer treatment of consumption dynamics and weaker reliance on intertemporal substitution.
Applying these insights to the 2022–23 tightening episode, we simulate all models under a counterfactual “no-tightening” scenario. The difference between the actual and counterfactual policy paths delivers an estimate of the impact of monetary policy on macroeconomic variables. The results suggest that monetary policy has been effective in curbing inflation, though at the cost of lower GDP growth, with notable differences across modelling approaches. Moreover, the results suggest that most of the impact of monetary policy on growth and inflation comes from the systematic response to changes in the macroeconomic environment.