Bank-Lending Standards, the Cost Channel and Inflation Dynamics

Sylvia Kaufmann and Johann Scharler

No 2009-16, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: If firms borrow working capital to finance production, then nominal interest rates have a direct influence on inflation dynamics, which appears to be the case empirically. However, interest rates may only partly mirror the cost of working capital. In this paper we explore the role of bank lending standards as a potential additional cost source and evaluate their empirical importance in explaining inflation dynamics in the US and in the euro area.

Keywords: New Keynesian Phillips Curve; Cost Channel; Bank Lending Standards; Bayesian Analysis (search for similar items in EconPapers)
JEL-codes: E40 E50 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2009-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
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http://www.econ.jku.at/papers/2009/wp0916.pdf (application/pdf)

Related works:
Working Paper: Bank-Lending Standards, the Cost Channel and Inflation Dynamics (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2009_16

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