The Own-Price of Money and a New Channel of Monetary Transmission
AbstractTraditionally, the effects of monetary policy actions on output are thought to be transmitted via monetary or credit channels. Real business cycle theory, by contrast, highlights the role of real price changes as a source of revisions in spending and production decisions. Motivated by the desire to focus on the effects of price changes in the monetary transmission mechanism, this paper incorporates a direct measure of the real own-price of money into an estimated vector autoregression and a calibrated real business cycle model. Consistent with this new view of the monetary transmission mechanism, both approaches reveal that movements in the own-price of money are strongly related to movements in output.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9341.
Date of creation: Nov 2002
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Publication status: published as Belongia, Michael T. and Peter N. Ireland. "The Own-Price Of Money and The Channels Of Monetary Transmission," Journal of Money, Credit and Banking, 2006, v38(2,Mar), 429-445.
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Other versions of this item:
- Michael T. Belongia & Peter N. Ireland, 2002. "The Own-Price of Money and a New Channel of Monetary Transmission," Boston College Working Papers in Economics 544, Boston College Department of Economics.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-11-18 (All new papers)
- NEP-CBA-2002-11-18 (Central Banking)
- NEP-DGE-2002-11-18 (Dynamic General Equilibrium)
- NEP-MON-2002-11-18 (Monetary Economics)
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