Please use this identifier to cite or link to this item:
Full metadata record
|dc.description.abstract||This paper presents a New Keynesian model that dwells on the roleof banks in the cost channel of monetary policy. Banks extend loans tofirms in an environment of monopolistic competition by setting the loanrate according to a Calvo-type staggered price setting approach, whichmeans that the adjustment of the aggregate loan rate to a monetary policyshock is sticky. We estimate the model for the Euro area by adopting aminimum distance approach. Our findings exhibit that, first, frictions onthe loan market influence the propagation of monetary policy shocks asthe pass-through of a change in the money market rate to the loan rateis incomplete, and, second, the cost channel is operating, but the effectis weak since inflation is driven by real unit labor costs rather than theloan rate. Our main conclusion is that the strength of the cost channel ismitigated as banks shelter firms from monetary policy shocks by smoothinglending rates.||en_US|
|dc.relation.ispartofseries|||aWürzburg economic papers |x71||en_US|
|dc.subject.keyword||minimum distance estimation||en_US|
|dc.title||Bank Behavior and the Cost Channel of Monetary Transmission||en_US|
Files in This Item:
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.