The financial accelerator and monetary policy rules
The ability of financial frictions to amplify the output response of monetary policy, as in the financial accelerator model of Bernanke et al. (1999), is analyzed for a wider class of policy rules where the policy interest rate responds to both inflation and the output gap. When policy makers respond to the output gap as well as inflation, the standard financial accelerator model reacts less to an interest rate shock than does a comparable model without an operational financial accelerator mechanism. In recessions, when firm-speci fic volatility rises, financial acceleration due to financial frictions is further reduced, even under pure inflation targeting.
Year of publication: |
2011-12
|
---|---|
Authors: | Kamber, Gunes ; Thoenissen, Christoph |
Institutions: | College of Business and Economics, Australian National University |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Kamber, Gunes, (2011)
-
Financial exposure and the international transmission of financial shocks
Kamber, Gunes, (2013)
-
News-driven business cycles in small open economies
Kamber, Gunes, (2014)
- More ...