The monetary transmission mechanism describes the channels through which changes in monetary policy affect the policy target, price inflation. Understanding the transmission mechanism is thus central to the successful conduct of monetary policy. This paper uses a Vector AutoRegressive (VAR)...

The paper presents a theoretical model of how banks and the non-bank private sector respond to changes in monetary policy. Unlike many textbook models in which banks play no active role, the banking sector is recognised here as playing a key part in transmitting changes in monetary policy to the...

A monetary economy comprises a vast array of market-clearing interest rates. Central banks exert a direct influence over only a narrow subset of these rates: the rate at which they supply marginal funds to the commercial banking system. Accordingly, the market interest rates which impinge upon...

Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous....

The UK is due to move to a system of real-time gross settlement (RTGS) later this year. Although the decision to move to RTGS was based on prudential concerns, this paper considers whether it has any implications for the implementation of monetary policy. In particular, the move could, in...

The authors extend the model of B. S. Bernanke and A. S. Blinder (1988) to consider formally interactions between the monetary authorities and the banking sector. Monetary policy is characterized in terms of the authorities control over prices in the base money market, rather than quantities....

Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous....

Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous....

Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous....