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Firms’ credit requirements and monetary policy rules

Author

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  • Koirala, Niraj P.
  • Kamara, Ahmed H.
  • Rankoth, Anurud

Abstract

We study the effects of inflation targeting, the Taylor rule, and unemployment targeting when firms face credit constraints. For all levels of credit requirements, the unemployment targeting rule is most effective in stabilizing major variables compared to the other rules.

Suggested Citation

  • Koirala, Niraj P. & Kamara, Ahmed H. & Rankoth, Anurud, 2019. "Firms’ credit requirements and monetary policy rules," Economics Letters, Elsevier, vol. 175(C), pages 113-117.
    • Handle: RePEc:eee:ecolet:v:175:y:2019:i:c:p:113-117
    DOI: 10.1016/j.econlet.2018.12.010
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    References listed on IDEAS

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    1. Faia, Ester, 2008. "Optimal monetary policy rules with labor market frictions," Journal of Economic Dynamics and Control, Elsevier, vol. 32(5), pages 1600-1621, May.
    2. Charles T. Carlstrom & Timothy S. Fuerst & Matthias Paustian, 2010. "Optimal Monetary Policy in a Model with Agency Costs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 37-70, September.
    3. Urban Jermann & Vincenzo Quadrini, 2012. "Erratum: Macroeconomic Effects of Financial Shocks," American Economic Review, American Economic Association, vol. 102(2), pages 1186-1186, April.
    4. Rotemberg, Julio J, 1982. "Sticky Prices in the United States," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1187-1211, December.
    5. Mishkin, Frederic S., 1998. "International Experiences With Different Monetary Policy Regimes," Seminar Papers 648, Stockholm University, Institute for International Economic Studies.
    6. Urban Jermann & Vincenzo Quadrini, 2012. "Macroeconomic Effects of Financial Shocks," American Economic Review, American Economic Association, vol. 102(1), pages 238-271, February.
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    Cited by:

    1. Abdullahi, Idris & Chua, Soo & Mohd, Saidatulakmal, 2020. "Investigation of optimal inflation targets for 15 major oil exporting Sub-Saharan African countries: A panel threshold estimation," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 25(49), pages 45-60.

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    More about this item

    Keywords

    Credit requirement; Borrowing constraints; Monetary policy rules;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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