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Title:Money and the transmission of monetary policy PDF Logo
Authors:Carpenter, Seth
Demiralp, Selva
Issue Date:2009
Series/Report no.:TÜSİAD-Koç University Economic Research Forum working paper series 0906
Abstract:The transmission mechanism of monetary policy has received extensive treatment in the macroeconomic literature. Most models currently used for macroeconomic analysis exclude money or else model money demand as entirely endogenous. Nevertheless, academic research and many textbooks continue to use the money multiplier concept in discussions of money. We explore the institutional structure of the transmission mechanism beginning with open market operations through to money and loans to document that the mechanism does not work through the standard multiplier model or the bank lending channel. Our analysis, however, does not reflect on the existence of a broader credit channel.
Subjects:monetary transmission mechanism
money multiplier
lending channel
JEL:E51
E52
Document Type:Working Paper
Appears in Collections:ERF Working Paper Series, TÜSİAD-Koç University Economic Research Forum (ERF)

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