This paper studies the monetary transmission mechanism in the U.S. It proposes a mixed-frequency version of the factor-augmented vector autoregressive regression (FAVAR) model, which is used to construct a coincident index to measure the monetary transmission mechanism. The model divides the transmission of changes in monetary policy to the economy into three stages according to the timing and ...

This paper examines how alternative views of the monetary transmission mechanism affect the choice of a monetary policy rule. The main finding is that many different structural models indicate that the same simple monetary policy rule—one in which the central bank’s target short-term interest rate reacts to inflation and to real output—would perform well. Such rules work well even in models whe...

This paper examines the effect of financial frictions on the strength of the monetary transmission mechanism. Credit channel theory implies that the transmission mechanism of monetary policy should be stronger in countries with high levels of financial frictions, all else equal. The intuition is that in these countries, external finance premiums are more sensitive to firms’ financial leverage. ...

In periods of distress, observed and perceived income risk tends to rise. Does this heightened affect monetary transmission? This paper first shows that in partial equilibrium, dampens the substitution effect interest rate changes but amplifies indirect wage changes. The effects are sizable equilibrium. An increase consistent with during recessions affects responses by around one-third. However...

The Central Bank of the Republic Turkey (CBRT)’s main target was price stability until 2008 global crisis, it also focused on financial in post-crisis period. CBRT has implemented new monetary policies that would react against shocks apart from traditional practices to limit negative effects crisis since end 2010. aim this study is analyze effectiveness transmission channels by CBRT, comparing ...

The aim of this paper is to explore the characteristics and functioning of monetary transmission in Croatia. Time series analysis (unit root test, VAR, Johansen cointegration procedure, Granger causality tests and error correction model) is used to estimate the influence of exchange rate, interest rate and narrow money on the real economic activity. The results of econometric analysis suggest t...

A resurgence of interest in the role of banks in the transmission of monetary policy has resulted in a spate of theoretical and empirical studies. These studies have established that, under certain conditions, the traditional transmission mechanism for monetary policy ("the money view") may be augmented through changes in the supply of bank loans ("the lending view"). Because both the money vie...