Monetary policy transmission modeling and policy responses

Xin Xu and Xiaoguang Xu

The North American Journal of Economics and Finance, 2023, vol. 64, issue C

Abstract: Monetary policy transmission depends significantly on agents’ attitudes about the state of the economy, especially during recessions. We develop an endogenous-switching New Keynesian model that allows agents to have heterogeneous responsiveness depending on their wealth and beliefs. After considering the additional transmission to the monetary policy, we find that the economy experiences lower deviations than those in the baseline model. And moreover, the transmission of exogenous shocks in the behavioral model varies across economies, especially depending on some macroeconomic variables and agents’ behaviors.

Keywords: Monetary policy transmission; Endogenous-switching New Keynesian model (search for similar items in EconPapers)
JEL-codes: E12 E52 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062940822001760
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:64:y:2023:i:c:s1062940822001760

DOI: 10.1016/j.najef.2022.101841

Access Statistics for this article

The North American Journal of Economics and Finance is currently edited by Hamid Beladi

More articles in The North American Journal of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().