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Financial systems and the cost channel transmission of monetary policy shocks

  • Kaufmann, Sylvia
  • Scharler, Johann

In this paper we study the role of financial systems for the cost channel transmission of monetary policy in a calibrated business cycle model. We analyze the different effects that monetary policy has on the economy, in particular on output and inflation, which are due to differences in country-specific financial systems. For a plausible calibration of the model, differences in financial systems have a rather limited effect on the transmission mechanism and do not appear to give rise to cross country differences in the strength of the cost channel

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 26 (2009)
Issue (Month): 1 (January)
Pages: 40-46

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Handle: RePEc:eee:ecmode:v:26:y:2009:i:1:p:40-46
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