Shaken or Stirred? Financial Deregulation and the Monetary Transmission Mechanism in Norway
AbstractWe address the issue of how the deregulation of financial markets has affected the monetary transmission mechanism in Norway. By estimating a dynamic system of money, credit, real income and inflation during a period of fundamental structural changes in monetary policy and financial markets we are able to present empirical evidence on the tenacity of the relationships between financial and real variables. We first investigate the stability of the long-run demand functions for money and credit by means of recursive techniques for cointegrated systems. The long-run relationships turn out to be surprisingly resilient in our model; the deregulation process does not cause any permanent shifts in the relationships between financial quantity variables, real economic activity and prices. Within a small simultaneous dynamic model of the Norwegian economy we find evidence for the credit view of the monetary transmission mechanism, as both credit and money exhibit strong and stable effects on aggregate demand.
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Bibliographic InfoPaper provided by Norwegian School of Economics and Business Administration- in its series Papers with number 32/98.
Length: 23 pages
Date of creation: 1998
Date of revision:
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Postal: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, HELLEVEIEN 30, 5035 BERGEN SANDVIKEN NORWAY.
Phone: 5595 9000
Fax: 5595 9100
Web page: http://www.nhh.no/
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ECONOMETRIC MODELS ; MONETARY POLICY ; FINANCIAL MARKET;
Other versions of this item:
- Bardsen, Gunnar & Klovland, Jan Tore, 2000. " Shaken or Stirred? Financial Deregulation and the Monetary Transmission Mechanism in Norway," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(4), pages 563-83, December.
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
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- Roger Hammersland & Cathrine Bolstad Træe, 2011. "The Financial Accelerator and the real economy. Self-reinforcing feedback loops in a core macro econometric model for Norway," Discussion Papers 668, Research Department of Statistics Norway.
- Holtemöller, Oliver, 2002. "Further VAR evidence for the effectiveness of a credit channel in Germany," SFB 373 Discussion Papers 2002,66, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Roger Hammersland & Dag Henning Jacobsen, 2008. "The Financial Accelerator: Evidence using a procedure of Structural Model Design," Discussion Papers 569, Research Department of Statistics Norway.
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