The Role of Credit Market Imperfections in the Monetary Transmission Mechanism PDF Download

Author: Mark Gertler
Publisher:
ISBN:
Category : Capital market
Languages : en
Pages : 48

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Author: Jan Kakes
Publisher: Edward Elgar Publishing
ISBN: 9781781959336
Category : Business & Economics
Languages : en
Pages : 176

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This work focuses on different aspects of the monetary transmission process, looking at both large and small economies in the EMU. The results offer useful evaluation tools with regard to monetary policy transmission in a European perspective.

Author: Pierre-Richard Agénor
Publisher:
ISBN:
Category :
Languages : en
Pages : 28

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Author: Pierre-Richard Agénor
Publisher:
ISBN:
Category :
Languages : en
Pages : 39

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Author: Simon Gilchrist
Publisher:
ISBN:
Category : Credit
Languages : en
Pages :

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Author: Jonas Daniel Maurice Fisher
Publisher:
ISBN:
Category : Credit control
Languages : en
Pages : 68

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Author: Wai-Ming Ho
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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In this paper a two-country overlapping generations model is presented in which the roles of financial factors in the international monetary transmission mechanism are studied and whether and how the two types of credit market imperfections, limited participation and costly state verification, may contribute to the high variability of exchange rates are examined. Liquidity effects generated by monetary disturbances are shown to have qualitatively similar effects on the world economy in the perfect information case and in the costly information case. However, quantitative differences provide different predictions about the variability of economic variables in the world economy.

Author: Ichiro Fukunaga
Publisher:
ISBN:
Category :
Languages : en
Pages : 258

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Author: Christina D. Romer
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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The question of how monetary policy affects the real economy is a perennial one in macroeconomics. Over the past several decades, however, the focus of the debate has changes. Today it is taken for granted that monetary policy affects aggregate demand; what is debated is why prices do not adjust fully to compensate for shifts in demand. Thirty years ago, in contrast, sluggish price adjustment was taken for granted; what was debated was the magnitude of the effect of monetary policy on aggregate demand and the channels through which that effect occurred. This paper returns to the subject of that older literature. A fresh look at the way monetary policy affects aggregate demand is particularly timely in light of recent developments in theoretical analyses of credit markets. Work over the past 15 years has suggested that imperfections are a central feature of capital markets, and that these imperfections can cause credit allocation to be made largely on the basis of quantity rationing rather than price adjustment and can create a special role for lending by financial intermediaries. This work has also shown that credit market imperfections can have important consequences for macroeconomic fluctuations in general and for the way monetary policy is transmitted to aggregate demand in particular.

Author: Mark Gertler
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 39

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We present evidence on the cyclical behavior of small versus large manufacturing firms, and on the response of the two classes of firms to monetary policy. Our goal is to take a step toward quantifying the role of credit market imperfections in the business cycle and in the monetary transmission mechanism. We find that, following tight money, small firms sales decline at a faster pace than large firm sales for a period of more than two years. Further, bank lending to small firms contracts, while it actually rises for large firms. Monetary policy indicators tied to the performance of banking, such as M2, have relatively greater predictive power for small firms than for large. Finally, small firms are more sensitive than are large to lagged movements in GNP. Considering that small firms overall are a non-trivial component of the economy, we interpret these results as suggestive of the macroeconomic relevance of credit market imperfections.