scholarly journals The Output Composition Puzzle: A Difference in the Monetary Transmission Mechanism in the Euro Area and United States

2003 ◽  
Vol 35 (6b) ◽  
pp. 1265-1306 ◽  
Author(s):  
Ignazio Angeloni ◽  
A. K. Kashyap ◽  
Benoit Mojon ◽  
Daniele Terlizzese
Keyword(s):  
United States ◽  
Euro Area ◽  
Transmission Mechanism ◽  
Monetary Transmission ◽  
Monetary Transmission Mechanism

scholarly journals Financial fragmentation and the monetary transmission mechanism in the euro area: a smooth transition VAR approach

2018 ◽  
Vol 22 (5) ◽  
Author(s):  
Hans-Helmut Kotz ◽  
Willi Semmler ◽  
Ibrahim Tahri
Keyword(s):  
Euro Area ◽  
Multivariate Time Series ◽  
Transmission Mechanism ◽  
Smooth Transition ◽  
Monetary Transmission ◽  
Monetary Transmission Mechanism ◽  
Time Series Approach ◽  
Lending Rates ◽  
Pass Through ◽  
The Impact

Abstract This paper investigates the effect of financial fragmentation on the monetary transmission mechanism in different Euro area economies, categorized into two groups: countries considered as “core” economies and countries characterized as “peripheral” economies. We analyze the effects of financial fragmentation on the monetary transmission mechanism through the traditional interest rate channel. To gauge the impact of changes in policy rates on the behavior of real variables such as aggregate output and employment we use a Smooth Transition VAR (VSTAR) model. Employing a nonlinear multivariate time series approach helps us capture the regime-dependent dynamics of the variables under study. The results obtained show that money market rates targeted by the central bank do not completely pass through to banks’ lending rates to firms, particularly in a financially fragmented environment. This finding supports the hypothesis of an impairment of the monetary transmission mechanism as a result of financial fragmentation. Given this impairment in some sectors and regions an accompanying credit volume policy might have been appropriate.

The Efficacy of Monetary Transmission Mechanism: The Case of the United States

2019 ◽  
Vol 1 (01) ◽  
pp. 30
Author(s):  
Alaa Alaabed
Keyword(s):  
United States ◽  
Inflation Targeting ◽  
The United States ◽  
Transmission Mechanism ◽  
Monetary Transmission ◽  
Monetary Transmission Mechanism ◽  
Long Run ◽  
Domestic Credit ◽  
Real Gdp Per Capita ◽  
The Interest Rate

This paper empirically investigates the effectiveness of monetary policy transmission in the United States from 1975-2010 using the Long-Run Structural Modelling (LRSM) and the techniques of error correction and variance decompositions. The results indicate that the domestic credit and exchange rate channels are relatively effective in influencing the real GDP per capita, and so is inflation-targeting, while the interest rate channel does not appear to play an important role as a monetary transmission mechanism, bearing in mind the interlinkages between the channels. The empirical analysis suggests that policy measures and structural reforms must be targeted accordingly in order to promote the effectiveness of monetary transmission mechanisms in the US and similar countries.

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