Monetary policy in a world without perfect capital markets

Charles Carlstrom and Timothy Fuerst

No 115, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: This working paper examines a theoretical model in which an entrepreneur?s net worth affects his ability to finance current activity. Net worth, in turn, is determined by asset prices, which can be affected by monetary policy. In this environment, the central bank plays a welfare-improving role by responding to asset price and technology shocks.

Keywords: Monetary policy; Interest rates (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mon and nep-pke
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:0115

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DOI: 10.26509/frbc-wp-200115

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