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)...

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...

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...

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)...

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...