Does monetary policy lose effectiveness during a credit crunch?

Mohan Bijapur

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This article investigates the effectiveness of monetary policy during a credit crunch by estimating a vector autoregression on the US economy. We present evidence that interest rate cuts have a diminished impact on growth, due to impairment in the relationship between monetary policy and the supply of intermediated credit.

Keywords: credit crunch; monetary policy; transmission mechanism; credit channel (search for similar items in EconPapers)
JEL-codes: E32 E5 G21 (search for similar items in EconPapers)
Date: 2010-01
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Citations: View citations in EconPapers (18)

Published in Economics Letters, January, 2010, 106(1), pp. 42-44. ISSN: 0165-1765

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