The cost channel of monetary transmission-revisited

Doh-Khul Kim and William Lastrapes ()

Applied Economics Letters, 2007, vol. 14, issue 10, 725-730

Abstract: This article empirically re-examines the importance of the cost channel of monetary transmission-the effect of money supply shocks on the costs of production and supply, as opposed to the traditional effect on demand. Unlike Barth and Ramey (2002), this article identifies the response of industry-level wages to money supply shocks by assuming long-run monetary neutrality. The pervasive findings of a positive response of real wages to money supply shocks in this study provide even stronger support for the cost channel than Barth and Ramey (2002).

Date: 2007
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DOI: 10.1080/13504850600592465

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