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Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
How Does the Strength of Monetary Policy Transmission Depend on Real Economic Activity?
We study the relationship between the strength of the bank credit channel (BCC) of monetary policy and real GDP growth in the United States using quarterly commercial bank level data between 1986 and 2008. We find that the BCC was significantly stronger during periods of low economic growth. Monetary policy is more effective through this channel in spurring economic activity during periods of low growth, rather than in cooling the economy when growth is high. Furthermore, we find that the BCC operated through a broader range of loan categories and banks than previously documented, underscoring this channel’s economic relevance.
Cite this item
Horacio Sapriza & Judit Temesvary, How Does the Strength of Monetary Policy Transmission Depend on Real Economic Activity?, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2019-023, 08 Apr 2019.
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- G2 - Financial Economics - - Financial Institutions and Services
Keywords: Bank balance sheet ; Bank lending channel ; GDP growth ; Monetary policy transmission
This item with handle RePEc:fip:fedgfe:2019-23
is also listed on EconPapers
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