Financial shocks and the maturity of the monetary policy rate
Petra Gerlach-Kristen () and
Barbara Rudolf ()
Economics Letters, 2010, vol. 107, issue 3, 333-337
Monetary policy is typically formulated with a very short-term interest rate, while longer rates matter in the transmission mechanism. We show that financial market shocks impact less on the macroeconomy if policy is set with a longer rate.
Keywords: Monetary; policy; framework; Maturity; of; the; policy; interest; rate; Financial; shocks; Three-month; libor (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:107:y:2010:i:3:p:333-337
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