The Monetary Transmission Mechanism in Italy: The Credit Channel and a Missing Ring

Riccardo Fiorentini and Roberto Tamborini

Giornale degli Economisti, 2001, vol. 60, issue 1, 1-42

Abstract: Research on how money affects economic activity has revived interest in the socalled "credit view". In this paper we focus on current developments in the credit view in order to assess the results of the past decade's research and its legacy for macroeconomics and monetary policy. We expound the main models of the "credit channels" of monetary transmission, drawing a distinction between models of aggregate demand, which are predominant, and models of aggregate supply, which are less developed despite theory suggests a potential connection between credit conditions and firms' production activity. Each approach is accompanied by a survey of the main empirical results with particular reference to Italy, where bankfirm relations are traditionally regarded as particularly important.

Keywords: monetary policy; credit; Italian economy (search for similar items in EconPapers)
JEL-codes: E2 E5 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (19)

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