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Credit Frictions and Optimal Monetary Policy
Cúrdia, Vasco - 2016
We extend the basic (representative-household) New Keynesian [NK] model of the monetary transmission mechanism to allow for a spread between the interest rate available to savers and borrowers, that can vary for either exogenous or endogenous reasons. We find that the mere existence of a...
Persistent link: https://www.econbiz.de/10013002563
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What is Wrong with Taylor Rules? Using Judgment in Monetary Policy Through Targeting Rules
Svensson, Lars E. O. - 2021
It is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule, either a general targeting rule (explicit objectives for monetary policy) or a specific targeting rule (a criterion for (the forecasts of) the target variables to be...
Persistent link: https://www.econbiz.de/10013210570
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The Effect of Credit Market Competition on Lending Relationships
Petersen, Mitchell A. - 2000
This paper provides a simple model showing that the extent of competition in credit markets is important in determining the value of lending relationships. Creditors are more likely to finance credit constrained firms when credit markets are concentrated because it is easier for these creditors...
Persistent link: https://www.econbiz.de/10012788596
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Banks, Liquidity Management and Monetary Policy
Bianchi, Javier - 2014
We develop a tractable model of banks' liquidity management and the credit channel of monetary policy. Banks finance … loans by issuing demand deposits. Loans are illiquid, and transfers of deposits across banks must be settled with reserves … in a frictional over the counter market. To mitigate the risk of large withdrawals of deposits, banks hold a …
Persistent link: https://www.econbiz.de/10013047393
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Are the Effects of Monetary Policy Shocks Big or Small?
Coibion, Olivier - 2011
This paper studies the small estimated effects of monetary policy shocks from standard VAR's versus the large effects from the Romer and Romer (2004) approach. The differences are driven by three factors: the different contractionary impetus, the period of reserves targeting and lag length...
Persistent link: https://www.econbiz.de/10013125566
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Banks' Exposure to Interest Rate Risk and the Transmission of Monetary Policy
Landier, Augustin - 2013
We show empirically that banks' exposure to interest rate risk, or income gap, plays a crucial role in monetary policy … transmission. In a first step, we show that banks typically retain a large exposure to interest rates that can be predicted with …
Persistent link: https://www.econbiz.de/10013085912
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Monetary Policy and Bank Lending
Kashyap, Anil K.; Stein, Jeremy C. - 2021
This paper surveys recent work that relates to the "lending" view of monetary policy transmission. It has three main goals: 1) to explain why it is important to distinguish between the lending and "money" views of policy transmission; 2) to outline the microeconomic conditions that are needed to...
Persistent link: https://www.econbiz.de/10013232736
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The Transmission Mechanism of Monetary Policy in Europe : Evidence from Banks' Balance Sheets
Favero, Carlo A.; Giavazzi, Francesco; Flabbi, Luca - 2021
. We use the information contained in the balance sheets of individual banks (available from the BankScope database) to … implement a case-study on the response of banks in France, Germany, Italy and Spain to a monetary tightening. The episode we … provided by the uniform squeeze in liquidity, which affected all banks in our sample. We study the first link in the …
Persistent link: https://www.econbiz.de/10013235277
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Inside the Black Box : The Credit Channel of Monetary Policy Transmission
Bernanke, Ben S.; Gertler, Mark - 2022
The 'credit channel' theory of monetary policy transmission holds that informational frictions in credit markets worsen … credit aggregates are not valid tests of this theory …
Persistent link: https://www.econbiz.de/10014158794
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The Credit Channel in Middle Income Countries
Tornell, Aaron; Westermann, Frank - 2022
Credit market conditions play a key role in propagating shocks in middle income countries (MICs). In particular, shocks to the spread between domestic and international interest rates have a strong effect on GDP, and an even stronger effect on domestic credit. This strong credit channel is...
Persistent link: https://www.econbiz.de/10014097846