Monetary Policy in a Downturn: Are Financial Crises Special?
Morten Bech (),
Leonardo Gambacorta () and
International Finance, 2014, vol. 17, issue 1, 99-119
This paper analyses the effectiveness of monetary policy during downturns associated with financial crises. Based on a sample of 24 developed countries, our empirical analysis suggests that monetary policy is less effective following a financial crisis as the monetary transmission mechanism is partially impaired. In particular, our results suggest that the benefits of accommodative monetary policy during a downturn are elusive when the downturn is associated with a financial crisis. In addition, we find that private sector deleveraging during a downturn helps to induce a stronger recovery.
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Working Paper: Monetary policy in a downturn: Are financial crises special? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:intfin:v:17:y:2014:i:1:p:99-119
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