The Cost Channel of Monetary Transmission

Marvin J. Barth and Valerie Ramey

No 7675, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents evidence that the cost channel' may be an important part of the monetary transmission mechanism. We argue that if working capital is an essential component of production and distribution, monetary contractions can affect output through a supply channel as well as the traditional demand-type channels. We specify an industry equilibrium model and use it to interpret the results of a VAR analysis. We find that following a monetary contraction, many industries exhibit periods of falling output and rising price-wage ratios, consistent with a supply shock in our model. We also show that the effects are noticeably more pronounced during the period before 1979.

JEL-codes: E3 E5 (search for similar items in EconPapers)
Date: 2000-04
New Economics Papers: this item is included in nep-his and nep-mon
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (100)

Published as The Cost Channel of Monetary Transmission , Marvin J. Barth III, Valerie A. Ramey. in NBER Macroeconomics Annual 2001, Volume 16 , Bernanke and Rogoff. 2002

Downloads: (external link)
http://www.nber.org/papers/w7675.pdf (application/pdf)

Related works:
Chapter: The Cost Channel of Monetary Transmission (2002)
Working Paper: The Cost Channel of Monetary Transmissions (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:7675

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w7675

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).