The Monetary Transmission Mechanism: An Empirical Framework
Open Access
- 1 November 1995
- journal article
- Published by American Economic Association in Journal of Economic Perspectives
- Vol. 9 (4), 11-26
- https://doi.org/10.1257/jep.9.4.11
Abstract
This paper provides an overview of the monetary transmission mechanism describing the impact of changes in monetary policy on real GDP. Changes in financial market prices--including long-term interest rates and exchange rates--are the main vehicle for the transmission of policy. The framework incorporates rational expectations and policy rules. It is empirical and appears to fit the facts well.Keywords
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