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Financial Systems and the Cost Channel Transmission of Monetary Policy Shocks

  • Johann Scharler

    (Oesterreichische Nationalbank)

  • Sylvia Kaufmann

    (Oesterreichische Nationalbank)

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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Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2006 with number 67.

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Date of creation: 02 Feb 2007
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Handle: RePEc:mmf:mmfc06:67
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