Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83468
Authors: 
Havránek, Tomáš
Rusnák, Marek
Year of Publication: 
2012
Series/Report no.: 
IES Working Paper 27/2012
Abstract: 
The transmission of monetary policy to the economy is generally thought to have long and variable lags. In this paper we quantitatively review the modern literature on monetary transmission to provide stylized facts on the average lag length and the sources of variability. We collect 67 published studies and examine when prices bottom out after a monetary contraction. The average transmission lag is 29 months, and the maximum decrease in prices reaches 0.9% on average after a onepercentage-point hike in the policy rate. Transmission lags are longer in developed economies (25-50 months) than in transition economies (10-20 months). We find that the factor most effective in explaining this heterogeneity is financial development: greater financial development is associated with slower transmission. Our results also suggest that researchers who use monthly data instead of quarterly data report systematically faster transmission.
Subjects: 
monetary policy transmission
vector autoregressions
meta-analysis
JEL: 
C83
E52
Document Type: 
Working Paper
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