Financial shocks and the maturity of the monetary policy rate
AbstractMonetary policy is typically formulated with a very short-term interest rate, while longer rates matter in the transmission mechanism. We show that financial market shocks impact less on the macroeconomy if policy is set with a longer rate.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 107 (2010)
Issue (Month): 3 (June)
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Web page: http://www.elsevier.com/locate/ecolet
Monetary policy framework Maturity of the policy interest rate Financial shocks Three-month libor;
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