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The monetary transmission mechanism in Italy: the credit channel and a missing ring

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  • Roberto Tamborini

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  • Riccardo Fiorentini

Abstract

Research on how money affects economic activity has revived interest in the socalled "credit view". In this paper we focus on current developments in the credit view in order to assess the results of the past decade's research and its legacy for macroeconomics and monetary policy. We expound the main models of the "credit channels" of monetary transmission, drawing a distinction between models of aggregate demand, which are predominant, and models of aggregate supply, which are less developed despite theory suggests a potential connection between credit conditions and firms' production activity. Each approach is accompanied by a survey of the main empirical results with particular reference to Italy, where bankfirm relations are traditionally regarded as particularly important.

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Paper provided by Department of Economics, University of Trento, Italia in its series Department of Economics Working Papers with number 0101.

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Date of creation: 2001
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Handle: RePEc:trn:utwpde:0101

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  1. Flora Bellone & Patrick Musso & Lionel Nesta & Stefano Schiavo, 2008. "Financial Constraints and Firm Export Behavior," Department of Economics Working Papers 0816, Department of Economics, University of Trento, Italia.
  2. Elisabetta De Antoni, 2008. "Minsky’s Upward Instability: the Not-Too-Keynesian Optimism of a Financial Cassandra," Department of Economics Working Papers 0812, Department of Economics, University of Trento, Italia.
  3. Luciano Andreozzi, 2008. "Property Rights and Investments: An Evolutionary Approach," Department of Economics Working Papers 0822, Department of Economics, University of Trento, Italia.
  4. K. Vela Velupillai, 2005. "The unreasonable ineffectiveness of mathematics in economics," Cambridge Journal of Economics, Oxford University Press, vol. 29(6), pages 849-872, November.
  5. Christopher L. Gilbert & Alexandra Tabova, 2004. "Commodity prices and debt sustainability," Department of Economics Working Papers 0404, Department of Economics, University of Trento, Italia.
  6. Julie Dana & Christopher L. Gilbert, 2008. "Managing Agricultural Price Risk in Developing Countries," Department of Economics Working Papers 0819, Department of Economics, University of Trento, Italia.
  7. Giuliana Passamani & Roberto Tamborini, 2006. "Monetary policy through the “credit-cost channel”. Italy and Germany," Department of Economics Working Papers 0609, Department of Economics, University of Trento, Italia.
  8. Giuseppe Arbia & Giuseppe Espa & Diego Giuliani & Andrea Mazzitelli, 2009. "Clusters of firms in space and time," Department of Economics Working Papers 0902, Department of Economics, University of Trento, Italia.
  9. Gianluca Grimalda & Lorenzo Sacconi, 2004. "The Constitution of the Not-For-Profit Organisation: Reciprocal Conformity to Morality," Department of Economics Working Papers 0413, Department of Economics, University of Trento, Italia.
  10. Christopher L. Gilbert, 2008. "How to Understand High Food Prices," Department of Economics Working Papers 0823, Department of Economics, University of Trento, Italia.
  11. Eugenio Gaiotti & Alessandro Secchi, 2004. "Is there a cost channel of monetary policy transmission? An investigation into the pricing behaviour of 2,000 firms," Temi di discussione (Economic working papers) 525, Bank of Italy, Economic Research and International Relations Area.
  12. Sandra Notaro & Alessandro Paletto & Roberta Raffaelli, 2008. "Does forest damage have an economic impact? A case study from the Italian Alps," Department of Economics Working Papers 0809, Department of Economics, University of Trento, Italia.
  13. Christopher L. Gilbert, 2008. "Commodity Speculation and Commodity Investment," Department of Economics Working Papers 0820, Department of Economics, University of Trento, Italia.
  14. Massimo Caruso, 2004. "Monetary Policy Impulses, Local Output and the Transmission Mechanism," Temi di discussione (Economic working papers) 537, Bank of Italy, Economic Research and International Relations Area.
  15. Lorenzo Sacconi & Stefano Moretti, 2004. "A Fuzzy Logic and Default Reasoning Model of Social Norm and Equilibrium Selection in Games under Unforeseen Contingencies," Department of Economics Working Papers 0412, Department of Economics, University of Trento, Italia.
  16. Lorenzo Sacconi, 2004. "A Social Contract Account for CSR as Extended Model of Corporate Governance (Part II): Compliance, Reputation and Reciprocity," Department of Economics Working Papers 0411, Department of Economics, University of Trento, Italia.
  17. Massimo Caruso, 2006. "Monetary Policy Impulses, Local Output and the Transmission Mechanism," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 65(1), pages 1-30, May.

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