scholarly journals The Role of Households’ Borrowing Constraints in the Transmission of Monetary Policy

2019 ◽  
Author(s):  
Fergus Cumming ◽  
Paul Hubert
Keyword(s):  
Monetary Policy ◽  
Borrowing Constraints ◽  
Transmission Of Monetary Policy

Liquidity, Risk Premia, and the Financial Transmission of Monetary Policy

2018 ◽  
Vol 10 (1) ◽  
pp. 309-328 ◽  
Author(s):  
Itamar Drechsler ◽  
Alexi Savov ◽  
Philipp Schnabl
Keyword(s):  
Monetary Policy ◽  
Risk Sharing ◽  
Financial System ◽  
Risk Premia ◽  
New Keynesian ◽  
Liquidity Premium ◽  
Impact Risk ◽  
The Cost ◽  
Transmission Of Monetary Policy

In recent years, there has been a resurgence of research on the transmission of monetary policy through the financial system, fueled in part by empirical findings showing that monetary policy affects asset prices and the financial system in ways not explained by the New Keynesian paradigm. In particular, monetary policy appears to impact risk premia in stock and bond prices and to effectively control the liquidity premium in the economy (the cost of holding liquid assets). We review these findings and recent theories proposed to explain them, and we outline a conceptual framework that unifies them. The framework revolves around the central role of liquidity in risk sharing and explains how monetary policy governs its production and use within the financial sector.

scholarly journals Money in a Theory of Banking

2006 ◽  
Vol 96 (1) ◽  
pp. 30-53 ◽  
Author(s):  
Douglas W Diamond ◽  
Raghuram G Rajan
Keyword(s):  
Adverse Effect ◽  
Monetary Policy ◽  
Foreign Exchange ◽  
Banking System ◽  
Real Activity ◽  
Aggregate Output ◽  
Demand Deposits ◽  
Financial Liquidity ◽  
Transmission Of Monetary Policy

We examine the role of banks in the transmission of monetary policy. In economies where banks use real demand deposits to finance their lending, fluctuations in the timing of production can force banks to scramble for real liquidity, or even fail, which can greatly affect lending and aggregate output. The adverse effect on output can be reduced if banks finance with nominal deposits. Nominal deposits also open a “financial liquidity” channel for monetary policy to affect real activity. The banking system may be better off, however, issuing real deposits (e.g., foreign exchange denominated) under some circumstances.

scholarly journals The Monetary Transmission Mechanism: An SVAR Analysis of the Four Municipalities in China

2017 ◽  
Vol 5 (1) ◽  
pp. 81
Author(s):  
Lili Wu ◽  
Mingxu Li
Keyword(s):  
Monetary Policy ◽  
Housing Demand ◽  
Monetary Policy Shocks ◽  
Monthly Data ◽  
Vector Autoregressive ◽  
Supply Shocks ◽  
Svar Model ◽  
Policy Shocks ◽  
Transmission Of Monetary Policy

This paper explores the role of housing markets in the transmission of monetary policy shocks across four Chinese municipalities, namely Beijing, Shanghai, Tianjin, and Chongqing. The analysis is based on identification of housing demand shocks, monetary policy shocks and credit supply shocks through a Structural Vector Autoregressive (SVAR) model estimated using monthly data for four cities from July 2005 to December 2015. The empirical results show great differences in the four cities as far as the housing market is concerned. They also indicate that housing plays a stronger role in the transmission of monetary policy shocks in Beijing and Shanghai than in Tianjin and Chongqing. These results are reasonably robust across several model specifications.

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