How Important is the Credit Channel in the Transmission of Monetary Policy?

Valerie Ramey

No 4285, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper empirically tests the importance of the credit channel in the transmission of monetary policy. Three credit variables are analyzed: total bank loans, bank holdings of securities relative to loans, and the difference in the growth rate of short-term debt of small and large firms. In order to determine the marginal effect of the credit channel over the standard money channel, the significance of the credit variables is studied in a model that includes money (M2). In most cases, the credit variables play an insignificant role in the impact of monetary policy shocks on output.

JEL-codes: E44 E51 (search for similar items in EconPapers)
Date: 1993-03
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (143)

Published as Carnegie-Rochester Conference Series on Public Policy, Fall 1993

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