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Monetary Transmission Mechanism (monetary + transmission_mechanism)
Selected AbstractsMONETARY TRANSMISSION MECHANISM IN CENTRAL AND EASTERN EUROPE: SURVEYING THE SURVEYABLEJOURNAL OF ECONOMIC SURVEYS, Issue 2 2009Balázs Égert Abstract This paper surveys recent advances in empirical studies of the monetary transmission mechanism, with special attention to Central and Eastern Europe (CEE). Our results indicate that the strength of the exchange rate pass-through substantially declined over time mainly due to a fall in inflation rates and to some extent due to the so-called composition effect. The asset price channel is weak and is likely to remain weak because of shallow stock and private bond markets and because of low stock and bond holdings of domestic households. House prices may become an exception with booming mortgage lending and with high owner occupancy ratios. While the credit channel could be a powerful channel of monetary transmission , as new funds raised on capital markets are close to zero in CEE , it is actually not, as both commercial banks and non-financial corporations can escape domestic monetary conditions by borrowing from their foreign mother companies. The moderately good news, however, is that those banks and firms are influenced by monetary policy in the euro area because their parent institutions are themselves subjected to the credit channel in the euro area. [source] Producers' Expectations: their Role in the Monetary Transmission MechanismKYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 1 2000Tobias F. Rötheli This article relates to the view expressed by Pigou and Keynes that whatever factors affect the demand for goods it is ultimately producers' expectations and plans that determine the level of output. We build on this notion in order to address the question how changes in monetary policy affect output in Switzerland. For this purpose we study data on expected and actual output collected by the business cycle research center(KOF) at the Federal Institute of Technology (ETH) in Zürich. The econometric analysis documents that monetary affect output only by their impact on expectations of entrepreneurs. This finding contradicts the new classical view of the propagation of monetary shocks. [source] Increased Diversity and Deepened Uncertainty: Policy Challenges in a Zero-Inflation Economy,INTERNATIONAL FINANCE, Issue 3 2007Kiyohiko G. Nishimura The world economy today shows ,great diversity'. There are multiple engines of growth in various regions around the globe. Risks are diversified, as many novel financial products are being introduced and sold to a continuing flow of newcomers to the financial world. This increased diversity seems to deepen uncertainty surrounding monetary policy in two respects. First, coupled with increased competition, it may make prices less responsive to short-run demand changes than before, thus making monetary transmission mechanism less certain. In fact, Japanese IS and Phillips curves seem increasingly uncertain in the past 15 years. Second, we are in transition between one financial structure of little diversification and another of great diversification. In a transition period, information is scarce and rapidly becomes obsolete, posing real challenges to financial stability. I argue that the flexible gradualism, which the Bank has now adopted, is a prudent way to cope with such deepened uncertainty. [source] MONETARY TRANSMISSION MECHANISM IN CENTRAL AND EASTERN EUROPE: SURVEYING THE SURVEYABLEJOURNAL OF ECONOMIC SURVEYS, Issue 2 2009Balázs Égert Abstract This paper surveys recent advances in empirical studies of the monetary transmission mechanism, with special attention to Central and Eastern Europe (CEE). Our results indicate that the strength of the exchange rate pass-through substantially declined over time mainly due to a fall in inflation rates and to some extent due to the so-called composition effect. The asset price channel is weak and is likely to remain weak because of shallow stock and private bond markets and because of low stock and bond holdings of domestic households. House prices may become an exception with booming mortgage lending and with high owner occupancy ratios. While the credit channel could be a powerful channel of monetary transmission , as new funds raised on capital markets are close to zero in CEE , it is actually not, as both commercial banks and non-financial corporations can escape domestic monetary conditions by borrowing from their foreign mother companies. The moderately good news, however, is that those banks and firms are influenced by monetary policy in the euro area because their parent institutions are themselves subjected to the credit channel in the euro area. [source] CAN TUNISIA MOVE TO INFLATION TARGETING?THE DEVELOPING ECONOMIES, Issue 1 2007Adel BOUGHRARA E47; E52; E58 Inflation targeting has become an alternative monetary strategy that has been followed by many industrial and emerging countries. This study considers whether the adoption of inflation targeting would be relevant for Tunisia. More specifically, this paper aims at checking whether the necessary conditions for the successful implementation of such a strategy are fulfilled or not. It is found that fiscal dominance does not constitute the main hindrance to the adoption of inflation targeting. Other impediments have been identified, especially a weak financial system in general, the unsound and fragile banking system in particular, and the glaring lack of knowledge about the monetary transmission mechanism. Furthermore, it has been pointed out that if Tunisian monetary authorities continue to carry out the present exchange rate regime, namely, the constant real exchange rate rule, an inflation targeting regime will not be sufficient to properly contain the inflation pressures caused by demand shocks. [source] Bank loan portfolios and the Canadian monetary transmission mechanismCANADIAN JOURNAL OF ECONOMICS, Issue 3 2009Wouter J. Den Haan Abstract Following a monetary tightening, bank loans to consumers decrease. This is true for both mortgage and non-mortgage loans, and it is true for a tightening by the Bank of Canada that is, and is not, a response to a tightening by the Federal Reserve System. In contrast, business loans increase following a monetary tightening. The ,perverse' response of business loans cannot be explained by an increase in the demand for funds due to a reduction in real activity. These results are consistent with a change in bank portfolio behaviour in favour of business loans in response to a monetary tightening. A la suite d'une restriction monétaire, les prêts bancaires aux consommateurs chutent. C'est vrai tant pour les prêts hypothécaires que non-hypothécaires, et c'est vrai pour une restriction monétaire de la Banque du Canada, qu'elle soit ou non le résultat d'une restriction de la Réserve Fédérale américaine. A l'inverse, les prêts bancaires aux entreprises s'accroissent suite à une restriction monétaire. Cette réponse ,perverse' des prêts aux entreprises ne peut pas s'expliquer par un accroissement de la demande de fonds attribuable à un déclin de l'activitééconomique. Ces résultats sont consistants avec un changement du comportement des banques qui déplacent leurs portefeuilles de prêts en faveur des entreporises quand il y a restriction monétaire. [source] Credit market imperfections and exchange rate variabilityCANADIAN JOURNAL OF ECONOMICS, Issue 2 2000Wai-Ming Ho In this paper a two-country overlapping generations model is presented in which the roles of financial factors in the international monetary transmission mechanism are studied and whether and how the two types of credit market imperfections, limited participation, and costly state verification may contribute to the high variability of exchange rates are examined. Liquidity effects generated by monetary disturbances are shown to have qualitatively similar effects on the world economy in the perfect information case and in the costly information case. However, quantitative differences provide dfferent predictions about the variability of economic variables in the world economy. JEL Classification: F31, F41 Ce mémoire présente un modèle de deux pays où les générations se chevauchent pour étudier le rôle des facteurs financiers dans le mécanisme de transmission monétaire international, et pour examiner si les deux types d'imperfection (participation limitée et contrôle étatique coûteux) peuvent contribuer à une grande variabilité des taux de change et de quelle manière. On montre que les effets de liquidité engendrés par les perturbations monétaires ont les mêmes effets qualitatifs sur l'économie mondiale que l'information soit parfaite ou coûteuse. Cependant, il y a des différences quantitatives. Ces différences suggèrent des écarts dans les prévisions quant à la variabilité des variables économiques dans l'économie mondiale. [source] Monetary Policy, Credit and Aggregate Supply: The Evidence from ItalyECONOMIC NOTES, Issue 3 2002Riccardo Fiorentini This paper concerns theory and evidence of the monetary transmission mechanisms. Current research has deeply investigated factors, such as dependence of firms on bank credit, that amplify the impact of monetary policy impulses on aggregate demand exerting strong but temporary effects on output and employment. We present an intertemporal macroeconomic equilibrium model of a competitive economy where current production is financed by bank credit, and then we use it to identify supply,side effects of the credit transmission mechanism in data drawn from the Italian economy. We find evidence that the ,credit variables' identified by the model , the overnight rate as a proxy of monetary policy and a measure of credit risk , have permanent effects on employment and output by altering credit supply conditions to firms. To save on space, mathematical proofs, statistical tests and data sources have been gathered in two separate appendices that can be examined on request. (J.E.L.: E2, E5). [source] | ||||||||||