Interest Rate Pass-Through, Monetary Policy Rules and Macroeconomic Stability
Claudia Kwapil () and
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Claudia Kwapil: Oesterreichische Nationalbank, Economic Analysis Division
Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)
In this paper we analyze equilibrium determinacy in a sticky price model in which the pass-through from policy rates to retail interest rates is sluggish and potentially incomplete. In addition, we empirically characterize and compare the interest rate pass-through process in the euro area and the U.S. We find that if the pass-through is incomplete in the long run, the standard Taylor principle is insufficient to guarantee equilibrium determinacy. Our empirical analysis indicates that this result might be particularly relevant for bank-based financial systems as for instance that in the euro area.
Keywords: Interest Rate Pass-Through; Interest Rate Rules; Equilibrium Determinacy; Stability (search for similar items in EconPapers)
JEL-codes: E32 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-fmk, nep-ifn, nep-mac and nep-mon
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Journal Article: Interest rate pass-through, monetary policy rules and macroeconomic stability (2010)
Working Paper: Interest Rate Pass-Through, Monetary Policy Rules and Macroeconomic Stability (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbwp:118
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