EconPapers    
Economics at your fingertips  
 

Deposit rate ceilings and monetary transmission in the US

Karel Mertens

Journal of Monetary Economics, 2008, vol. 55, issue 7, 1290-1302

Abstract: Establishing the existence and nature of changes in the conduct and transmission of monetary policy is key in understanding the remarkable macroeconomic performance of the US since the mid-1980s. This paper presents evidence on a phenomenon of disintermediation occurring during the major recessions in the 1960s and 1970s, but absent ever since, and shows that disintermediation is closely linked to the existence of deposit rate ceilings under regulation Q. In a monetary DSGE model that incorporates deposit rate ceilings as occasionally binding constraints, the regulation alters the behavior of money aggregates and exacerbates the drop in economic activity following a monetary tightening. The results of a threshold VAR lend support to the main theoretical predictions of the model.

Keywords: Monetary; policy; Monetary; transmission; Banking; Financial; regulation (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(08)00117-7
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:moneco:v:55:y:2008:i:7:p:1290-1302

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-23
Handle: RePEc:eee:moneco:v:55:y:2008:i:7:p:1290-1302