Is there a broad credit channel for monetary policy?, Federal Reserve Bank of San Francisco Economic Review (1996)
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BibTeX
@MISC{Oliner96isthere,
author = {Stephen D. Oliner and Mark Gertler and Simon Gilchrist and Anil Kashyap and David Romer},
title = {Is there a broad credit channel for monetary policy?, Federal Reserve Bank of San Francisco Economic Review},
year = {1996}
}
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Abstract
Using data for the U.S. manufacturing sector, we test for the existence of a broad credit channel for monetary policy, which operates through the total supply of loans. Our test focuses on the relationship between internal funds and business investment. After a monetary tightening, we find that this relationship becomes much closer for small firms but not for large firms. In contrast, after a monetary easing, the relationship is little changed for all firms. This evidence supports the existence of a broad credit channel. In recent theoretical and empirical research, interest has been rekindled in a credit channel for the transmission of monetary shocks to real output. This line of research stresses that central bank actions affect output, in part, by causing shifts in the supply of loans. In contrast, the traditional Keynesian analysis of the transmission mechanism
