The monetary transmission mechanism: is it relevant for policy?

Bernardino Adao; Isabel Correia; Pedro Teles

doi:10.1162/154247604323068014

The monetary transmission mechanism: is it relevant for policy?

Bernardino Adao^*
, Isabel Correia
, Pedro Teles

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

3 Citations (Scopus)

Abstract

We study environments with sticky prices, wages, or portfolios where it is feasible and optimal to use monetary policy to replicate the allocation under full flexibility. In these environments the optimal policy does not depend on the scope of the frictions. In this sense, the strength of the monetary transmission mechanism is irrelevant for the conduct of monetary policy. So, asymmetries in the strength of the transmission mechanisms do not impose a cost on a common policy.

Original language	English
Pages (from-to)	310-319
Number of pages	10
Journal	Journal of the European Economic Association
Volume	2
Issue number	2-3
DOIs	https://doi.org/10.1162/154247604323068014
Publication status	Published - 2004

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title = "The monetary transmission mechanism: is it relevant for policy?",

abstract = "We study environments with sticky prices, wages, or portfolios where it is feasible and optimal to use monetary policy to replicate the allocation under full flexibility. In these environments the optimal policy does not depend on the scope of the frictions. In this sense, the strength of the monetary transmission mechanism is irrelevant for the conduct of monetary policy. So, asymmetries in the strength of the transmission mechanisms do not impose a cost on a common policy.",

author = "Bernardino Adao and Isabel Correia and Pedro Teles",

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doi = "10.1162/154247604323068014",

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T1 - The monetary transmission mechanism

T2 - is it relevant for policy?

AU - Adao, Bernardino

AU - Correia, Isabel

AU - Teles, Pedro

PY - 2004

Y1 - 2004

N2 - We study environments with sticky prices, wages, or portfolios where it is feasible and optimal to use monetary policy to replicate the allocation under full flexibility. In these environments the optimal policy does not depend on the scope of the frictions. In this sense, the strength of the monetary transmission mechanism is irrelevant for the conduct of monetary policy. So, asymmetries in the strength of the transmission mechanisms do not impose a cost on a common policy.

AB - We study environments with sticky prices, wages, or portfolios where it is feasible and optimal to use monetary policy to replicate the allocation under full flexibility. In these environments the optimal policy does not depend on the scope of the frictions. In this sense, the strength of the monetary transmission mechanism is irrelevant for the conduct of monetary policy. So, asymmetries in the strength of the transmission mechanisms do not impose a cost on a common policy.

UR - https://www.scopus.com/pages/publications/38949194065

U2 - 10.1162/154247604323068014

DO - 10.1162/154247604323068014

M3 - Article

AN - SCOPUS:38949194065

SN - 1542-4774

VL - 2

SP - 310

EP - 319

JO - Journal of the European Economic Association

JF - Journal of the European Economic Association

IS - 2-3

ER -

The monetary transmission mechanism: is it relevant for policy?

Abstract

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