Artikel

The "Credit-Cost Channel" of Monetary Policy. A Theoretical Assessment

Drawing on the modern literature on the monetary transmission mechanisms with capital market imperfections, this paper presents a model of the "credit-cost channel" of monetary policy. The thrust of the model is that firms' reliance on bank loans ("credit channel") may make aggregate supply sensitive to bank interest rates ("cost channel"), which are in turn driven by the official rate controlled by the central bank. The model is assessed theoretically by examining whether, and under what conditions, changes in the policy interest rate produce the whole pattern of the observed stylized effects of monetary policy, with no recourse to non-competitive hypotheses and frictions in the goods and labour markets. This result is obtained for parameter values in the range of available consensus estimates, with a caveat concerning labour-supply elasticity to the real wage rate.

Language
Englisch

Bibliographic citation
Journal: Economics: The Open-Access, Open-Assessment E-Journal ; ISSN: 1864-6042 ; Volume: 3 ; Year: 2009 ; Issue: 2009-13 ; Pages: 1-23 ; Kiel: Kiel Institute for the World Economy (IfW)

Classification
Wirtschaft
Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
Money Supply; Credit; Money Multipliers
Subject
Macroeconomics and monetary economics
monetary transmission mechanisms
credit channel
cost channel
Geldpolitik
Kreditkanal
Kapitalkosten
Transmissionsmechanismus
Zinspolitik
Theorie

Event
Geistige Schöpfung
(who)
Tamborini, Roberto
Event
Veröffentlichung
(who)
Kiel Institute for the World Economy (IfW)
(where)
Kiel
(when)
2009

DOI
doi:10.5018/economics-ejournal.ja.2009-13
Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Artikel

Associated

  • Tamborini, Roberto
  • Kiel Institute for the World Economy (IfW)

Time of origin

  • 2009

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