Money and the Transmission of Monetary Policy

Seth Carpenter () and Selva Demiralp
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Seth Carpenter: Board of Governors of the Federal Reserve System

Koç University-TUSIAD Economic Research Forum Working Papers from Koc University-TUSIAD Economic Research Forum

Abstract: The transmission mechanism of monetary policy has received extensive treatment in the macroeconomic literature. Most models currently used for macroeconomic analysis exclude money or else model money demand as entirely endogenous. Nevertheless, academic research and many textbooks continue to use the money multiplier concept in discussions of money. We explore the institutional structure of the transmission mechanism beginning with open market operations through to money and loans to document that the mechanism does not work through the standard multiplier model or the bank lending channel. Our analysis, however, does not reflect on the existence of a broader credit channel

Keywords: Monetary transmission mechanism; money multiplier; lending channel (search for similar items in EconPapers)
JEL-codes: E51 E52 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2009-09
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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