The Monetary Transmission Mechanism: Is It Relevant for Policy?

Bernardino Adao (), Isabel Correia () and Pedro Teles

Journal of the European Economic Association, 2004, vol. 2, issue 2-3, 310-319

Abstract: We study environments with sticky prices, wages, or portfolios where it is feasible and optimal to use monetary policy to replicate the allocation under full flexibility. In these environments the optimal policy does not depend on the scope of the frictions. In this sense, the strength of the monetary transmission mechanism is irrelevant for the conduct of monetary policy. So, asymmetries in the strength of the transmission mechanisms do not impose a cost on a common policy. (JEL: E31, E41, E58, E62) Copyright (c) 2004 The European Economic Association.

Date: 2004
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Working Paper: The Monetary Transmission Mechanism: Is it Relevant for Policy? (2003)
Working Paper: The Monetary Transmission Mechanism: Is it Relevant for Policy? (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:tpr:jeurec:v:2:y:2004:i:2-3:p:310-319

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