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    Liquidity effects and cost channels in monetary transmission

    Aksoy, Yunus and Basso, H. and Coto-Martinez, J. (2009) Liquidity effects and cost channels in monetary transmission. Working Paper. Birkbeck College, University of London, London, UK.

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    Abstract

    We study liquidity effects and cost channels within a model of nominal rigidities and imperfect competition that gives explicit role for money-credit markets and investment decisions. We find that cost channels matter for monetary transmission, amplifying the impact of supply shocks and dampening the effects of demand shocks. Liquidity effects only obtain when the policy is specified by an interest rate policy rule and money-credit conditions are determined endogenously. We also find that determinacy issues are particularly relevant when models include the cost channel and explicit money-credit markets.

    Metadata

    Item Type: Monograph (Working Paper)
    Additional Information: BWPEF 0902
    Keyword(s) / Subject(s): Liquidity effect, cost channel, investment �nance, Taylor rule, indeterminacy
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management
    Research Centre: Applied Macroeconomics, Birkbeck Centre for
    Depositing User: Administrator
    Date Deposited: 24 Jun 2013 14:00
    Last Modified: 06 Dec 2016 14:49
    URI: http://eprints.bbk.ac.uk/id/eprint/7556

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