<abstract xml:lang="en" xmlns="http://www.w3.org/1999/xhtml"><p>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.</p></abstract>

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.

The Cost Channel of Monetary Policy Transmission

Centrum für angewandte Wirtschaftsforschung

South East European Journal of Economics and Business

{"article-title":"The Cost Channel of Monetary Policy Transmission"}

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...

The Cost Channel of Monetary Policy Transmission

Publié en ligne: 07 juin 2011

Pages: 19 - 23

DOI: https://doi.org/10.2478/v10033-010-0002-7

Mots clés
Cost Channel, Monetary Transmission, Monetary Policy

This content is open access.

The Cost Channel of Monetary Policy Transmission

Publié en ligne: 07 juin 2011

Pages: 19 - 23

DOI: https://doi.org/10.2478/v10033-010-0002-7

Mots clésCost Channel, Monetary Transmission, Monetary Policy

This content is open access.

Mots clés
Cost Channel, Monetary Transmission, Monetary Policy