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Banks and Monetary Shocks in Emerging Markets: How Far Can We Go with the "Credit View"?

Author

Listed:
  • Mr. Luis Catão
  • Mr. Sergio L. Rodriguez

Abstract

This paper examines the propagation of monetary shocks in a two-good optimizing macromodel where domestic banking activity is costly and the non-tradable sector is highly dependent on domestic bank credit, as in most emerging market economies. The model develops the Bernanke-Blinder “credit view” of the monetary transmission mechanism along classical lines, with no Keynesian rigidities being imposed and the only sources of “imperfection” arising from deposit and credit-in-advance constraints. Using numerical simulations, we show that such a relatively simple model goes a long way toward explaining some key “stylized facts” of recent financial crises.

Suggested Citation

  • Mr. Luis Catão & Mr. Sergio L. Rodriguez, 2000. "Banks and Monetary Shocks in Emerging Markets: How Far Can We Go with the "Credit View"?," IMF Working Papers 2000/068, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2000/068
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    Citations

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    Cited by:

    1. Raoul Lättemäe, 2001. "Monetary transmission mechanism in Estonia - some theorethical considerations and stylized aspects," Bank of Estonia Working Papers 2001-4, Bank of Estonia, revised 13 Oct 2001.
    2. Lu'is A. V. Cat~ao & Jan Ditzen & Daniel Marcel te Kaat, 2023. "Global Factors in Non-core Bank Funding and Exchange Rate Flexibility," Papers 2310.11552, arXiv.org, revised Jan 2024.
    3. Gongpil Choi, 2001. "Structural changes and the scope of inflation targeting in Korea," Pacific Basin Working Paper Series 2001-05, Federal Reserve Bank of San Francisco.
    4. Gongpil Choi, 2003. "The Choice of Monetary Regime for Post-Crisis Asia. The Case of South Korea," Revue économique, Presses de Sciences-Po, vol. 54(5), pages 1137-1160.

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