Work

The Monetary Transmission Mechanism: Is it Relevant for Policy?

Year: 2004

Type: article

Abstract: We study environments with sticky prices, wages, or portfolios where it is feasible and optimal to use monetary policy to replicate the allocation under full flexibility. In these environments the optimal policy does not depend on the scope of the frictions. In this sense, the strength of the monetary transmission mechanism is irrelevant for the conduct of monetary policy. So, asymmetries in the strength of the transmission mechanisms do not impose a cost on a common policy.

Source: Journal of the European Economic Association

DOI: 10.1162/154247604323068014

Authors: Bernardino Adão, Isabel Correia, Pedro Teles

Institutions: Banco de Portugal, Universidade Católica Portuguesa, Federal Reserve Bank of Chicago

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2060344151

FWCI: 2.693

Cites: 3

Cited by: 13

Related to: 10