Consumer Credit, Liquidity and the Transmission Mechanism of Monetary Policy

Ryan Brady ()

Departmental Working Papers from United States Naval Academy Department of Economics

Abstract: That the lending channel is alive and well for consumer lending is at first glance a compelling notion given the growth in consumer credit. However, this paper demonstrates with disaggregated monthly and quarterly consumer credit data that the consumer loan-supply effect has diminished over time. Contrary to assumptions motivating the lending channel, households are not constrained in accessing credit from any lender (or in any form) in response to a monetary shock. The findings of this paper have important implications for research on the monetary transmission mechanism beyond the lending channel and for business cycle research in general.

Pages: 38 pages
Date: 2007-12
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: CONSUMER CREDIT, LIQUIDITY, AND THE TRANSMISSION MECHANISM OF MONETARY POLICY (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:usn:usnawp:20

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