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The transmission mechanism of monetary policy at the beginning of the third millennium


  • Katerina Smidkova

    (Czech National Bank)


In last decade, three important challenges – the introduction of new strategies for monetary policy, the observed differences in anatomy of financial crisis between developed and emerging economies, and the emergence of the EMU – gave rise to new focus of debate about transmission mechanism of monetary policy. Three stages of transmission have been distinguished more clearly. The emphasis has been given to several transmission channels that had not been in the core of the previous debate. The differences in transmission mechanism of monetary policy across countries have been analyzed, and consequently, more attention has been paid to risks when deriving lessons from one country experience for another economy. An overview of the theoretical foundations, three main stages and channels of transmission mechanism provides background for illustrations of cross-country differences. The specific problems of transmission mechanism of monetary policy in emerging economies are discussed in more detail.

Suggested Citation

  • Katerina Smidkova, 2004. "The transmission mechanism of monetary policy at the beginning of the third millennium," Macroeconomics 0403012, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0403012
    Note: Type of Document - pdf; pages: 25. This is an up-dated English version of the paper published in the Czech Journal of Economics and Finance [in Czech] in 2002

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    References listed on IDEAS

    1. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    2. Ben S. Bernanke & Mark Gertler, 1999. "Monetary policy and asset price volatility," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 17-51.
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    Cited by:

    1. Lepushynskyy, Volodymyr, 2008. "Lines of monetary transmission optimization under conditions of transition economy," MPRA Paper 10102, University Library of Munich, Germany.

    More about this item


    Transmission mechanism Monetary policy Emerging economies;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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