How can central banks take account of differences across households and firms for monetary policy?

Bank for International Settlements

No 157 in BIS Papers from Bank for International Settlements

Abstract: Different economic agents might respond differently to the same policy action. Information about household and firm heterogeneity can, therefore, enhance central banks' understanding of monetary policy transmission and ultimately its effectiveness. Cross-sectional data can also help central banks understand economic conditions and the distributional effects of monetary policy. The papers in this volume examine the extent to which cross-sectional differences matter for monetary policy in emerging market economies, why they matter, and how central banks can adjust their monetary policy approaches in response. The papers also identify challenges to incorporating cross-sectional information in monetary policy analysis, such as data limitations, technical complexities, and communications.

Date: 2025 Written 2025-06
ISBN: 978-92-9259-857-0
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Chapters in this book:

Keeping the momentum: how finance can continue to support growth in EMEs , pp 1-32

Yingwei Dong, Tirupam Goel, Emanuel Kohlscheen and Philip Wooldridge

Monetary Policy and Distribution: Insights from Argentina , pp 33-44

Central Bank of Argentina

Firm and household heterogeneity at the Central Bank of Chile , pp 45-62

Central Bank of Chile

Addressing heterogeneity via structural monetary policy: China's practices , pp 63-72

People's Bank of China

Changes in the distribution of new loans by risk category throughout the post-pandemic credit cycle in Colombia , pp 73-102

Central Bank of Colombia

Household and firm heterogeneity , pp 103-120

Czech National Bank

Monetary policy decision-making: how are household and firm heterogeneity incorporated? , pp 121-130

Hong Kong Monetary Authority

Monetary policy decision-making: how are household and firm heterogeneity incorporated in Hungary? , pp 131-146

Magyar Nemzeti Bank

Monetary policy and heterogeneities - India , pp 147-154

Reserve Bank of India

Bank Indonesia's approach to incorporating household and firm heterogeneity in monetary policy decision-making , pp 155-160

Bank Indonesia

Monetary tightening at work: transmission and heterogeneity , pp 161-170

Bank of Israel

Heterogeneity and monetary policy in Korea , pp 171-182

Bank of Korea

Household and firm heterogeneity in monetary policy decision-making - Malaysia's perspective , pp 183-194

Bank Negara Malaysia

Monetary policy transmission in Mexico: an overview and banking channels insights using granular data , pp 195-224

Banco de Mexico

Heterogeneity considerations in monetary policy design: the case of Peru , pp 225-242

Central Reserve Bank of Peru

Monetary Policy and Degree of Heterogeneity in the Philippines , pp 243-256

Bangko Sentral ng Pilipinas

Monetary policy and welfare redistribution in Poland , pp 257-270

National Bank of Poland

Household and firm-level heterogeneity in monetary policy: the case of Saudi Arabia , pp 271-278

Saudi Central Bank

The role of household and firm heterogeneity in the South African Reserve Bank's monetary policy deliberations , pp 279-284

South African Reserve Bank

Monetary policy and household heterogeneity , pp 285-294

Bank of Thailand

The heterogeneous impact of monetary policy announcements on firms' financial outcomes , pp 295-330

Central Bank of the Republic of Türkiye

The Heterogeneity of Banks, Businesses and Households in the Monetary Policy Transmission Mechanism , pp 331-359

State Bank of Vietnam

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