The balance sheet channel
We study the role of the balance sheet channel of monetary policy in an environment in which credit plays an important role in the funding of new capital investment. Specifically, we ask whether the transmission mechanism of monetary policy is altered in an environment in which financial intermediat...
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Banco Central de Chile
2019
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| Acceso en línea: | https://hdl.handle.net/20.500.12580/3764 |
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oai-20.500.12580-37642021-04-24T11:04:11Z The balance sheet channel Cohen-Cole, Ethan Martínez-García, Enrique POLÍTICA MONETARIA We study the role of the balance sheet channel of monetary policy in an environment in which credit plays an important role in the funding of new capital investment. Specifically, we ask whether the transmission mechanism of monetary policy is altered in an environment in which financial intermediation with agency costs, aggregate risk on the performance of loans, and banking regulations are all features that can potentially amplify the impact of shocks over the cycle. Because monetary policy has empirically been asymmetric and marked by periods of pronounced action, our approach provides an alternative plausible mechanism that generates the necessary intuition to account for these patterns. Our model is consistent with current New Neoclassical Synthesis models in good times. In bad times (or crisis periods), when systemic losses are potentially large, the model can generate sharp changes in the external finance premium and, therefore, in the patterns of investment. 2019-11-01T00:04:57Z 2019-11-01T00:04:57Z 2010 Artículo 978-956-7421-34-3 https://hdl.handle.net/20.500.12580/3764 eng Series on Central Banking, Analysis, and Economic Policies, no. 15 Attribution-NonCommercial-NoDerivs 3.0 Chile http://creativecommons.org/licenses/by-nc-nd/3.0/cl/ .pdf Sección o Parte de un Documento p. 255-297 application/pdf Banco Central de Chile |
| institution |
Banco Central |
| collection |
Banco Central |
| language |
eng |
| topic |
POLÍTICA MONETARIA |
| spellingShingle |
POLÍTICA MONETARIA Cohen-Cole, Ethan Martínez-García, Enrique The balance sheet channel |
| description |
We study the role of the balance sheet channel of monetary policy in an environment in which credit plays an important role in the funding of new capital investment. Specifically, we ask whether the transmission mechanism of monetary policy is altered in an environment in which financial intermediation with agency costs, aggregate risk on the performance of loans, and banking regulations are all features that can potentially amplify the impact of shocks over the cycle. Because monetary policy has empirically been asymmetric and marked by periods of pronounced action, our approach provides an alternative plausible mechanism that generates the necessary intuition to account for these patterns. Our model is consistent with current New Neoclassical Synthesis models in good times. In bad times (or crisis periods), when systemic losses are potentially large, the model can generate sharp changes in the external finance premium and, therefore, in the patterns of investment. |
| format |
Artículo |
| author |
Cohen-Cole, Ethan Martínez-García, Enrique |
| author_facet |
Cohen-Cole, Ethan Martínez-García, Enrique |
| author_sort |
Cohen-Cole, Ethan |
| title |
The balance sheet channel |
| title_short |
The balance sheet channel |
| title_full |
The balance sheet channel |
| title_fullStr |
The balance sheet channel |
| title_full_unstemmed |
The balance sheet channel |
| title_sort |
balance sheet channel |
| publisher |
Banco Central de Chile |
| publishDate |
2019 |
| url |
https://hdl.handle.net/20.500.12580/3764 |
| work_keys_str_mv |
AT cohencoleethan thebalancesheetchannel AT martinezgarciaenrique thebalancesheetchannel AT cohencoleethan balancesheetchannel AT martinezgarciaenrique balancesheetchannel |
| _version_ |
1718346472277147648 |