The Cost Channel of Monetary Policy Transmission

• Authors: Andreas Westermeier
• Languages of publication: EN

Abstracts

EN

In this paper, we develop the new Keynesian Phillips curve augmented by the cost channel of monetary transmission and analyze the central bank's best monetary policy if the central bank is obliged to minimize inflation. It can be shown that a small change of the cost channel's coefficient might lead from a major increase in interest rates to a major decrease in interest rates and vice versa. Even though the optimal interest rate might change dramatically, the inflation response is of only marginal effect.

Keywords

EN

Cost Channel; Monetary Transmission; Monetary Policy

• Publisher: Sciendo
• Journal: South East European Journal of Economics and Business
• Year: 2010
• Volume: 5
• Issue: 1
• Pages: 19-23

Dates

published

2010-04-01

online

2011-06-07

Contributors

author

Andreas Westermeier

• Centrum für angewandte Wirtschaftsforschung

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Identifiers

DOI

10.2478/v10033-010-0002-7