The Monetary Transmission Mechanism at the Sectoral Level

Jean Farès and Gabriel Srour

Staff Working Papers from Bank of Canada

Abstract: This paper relies on simple vector autoregressions to investigate the monetary transmission mechanism in broad sectors of the Canadian economy. Two types of disaggregation are considered: one at the level of final expenditures, and one at the level of production. At the level of final expenditures, it is found that a monetary contraction affects exports relatively quickly, and it affects investment much more substantially than the consumption of goods, while it does not seem to affect services. Not surprisingly, durables respond much more substantially than semi-durables to a monetary contraction, while non-durables do not respond significantly. At the level of production, following a monetary contraction, construction reaches the trough of the cycle first, although, cumulatively, manufacturing reacts twice as strongly. The response of the service sector is significant, but it lags manufacturing.

Keywords: Transmission; of; monetary; policy (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2001
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:01-27

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