Financial shocks and the maturity of the monetary policy rate
Monetary policy is typically formulated with a very short-term interest rate, while longer rates matter in the transmission mechanism. We show that financial market shocks impact less on the macroeconomy if policy is set with a longer rate.
Year of publication: |
2010
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Authors: | Gerlach-Kristen, Petra ; Rudolf, Barbara |
Published in: |
Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 107.2010, 3, p. 333-337
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Publisher: |
Elsevier |
Keywords: | Monetary policy framework Maturity of the policy interest rate Financial shocks Three-month libor |
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