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Financial Systems and the Cost Channel Transmission of Monetary Policy Shocks

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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File URL: http://www.oenb.at/dms/oenb/Publikationen/Volkswirtschaft/Working-Papers/2006/Working-Paper-116/fullversion/wp116__tcm16-40477.pdf
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Paper provided by Oesterreichische Nationalbank (Austrian Central Bank) in its series Working Papers with number 116.

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Length: 36
Date of creation: 14 Mar 2007
Date of revision:
Handle: RePEc:onb:oenbwp:116
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