Prices and Quantities in the Monetary Policy Transmission Mechanism

Monetary policy and asset prices

The purpose of this paper is study the effect of monetary policy on asset prices. We study the properties of a monetary model in which a real asset is valued for its rate of return and for its liquidity. We show that money is essential if and only if real assets are scarce, in the precise sense that their supply is not sufficient to satisfy the demand for liquidity. Our model generates a clear ...

Monetary Policy and Asset Prices

The rst part of this paper surveys the literature on asset prices and monetary policy. The original contributions begin in section 3. Here we consider how two types of shocks associated with asset prices a ect the economy, and the appropriate policy response. The rst set of shocks are ones whose primary impact lies in the future. These shocks a ect the economy by raising asset prices today. The...

Asset Prices and Monetary Policy

This paper studies monetary-policy shocks, deŽ ned from federal funds target movements relative to daily interest-rate data. These shocks are nearly ideal measures of unexpected movements in monetary policy. Market expectations can summarize the vast amount of information used by the Fed in setting policy, and used by Fed-watchers in guessing the Fed’s actions, thus surmounting the omitted-vari...

The Transmission Mechanism of Monetary Policy : A Critical Review

Output Composition of Monetary Policy Transmission

This paper aims to investigate the role of each aggregate spending component in the monetary policy transmission in Indonesia. It assesses the relative strength of the role of each spending component in the monetary policy transmission. In so doing, this study employs the contribution analysis, which is calculated based on the cumulative impulse response of each component of GDP to a monetary p...