NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Important is the Credit Channel in the Transmission of Monetary Policy?

Valerie A. Ramey

NBER Working Paper No. 4285
Issued in March 1993
NBER Program(s):   EFG   ME

This paper empirically tests the importance of the credit channel in the transmission of monetary policy. Three credit variables are analyzed: total bank loans, bank holdings of securities relative to loans, and the difference in the growth rate of short-term debt of small and large firms. In order to determine the marginal effect of the credit channel over the standard money channel, the significance of the credit variables is studied in a model that includes money (M2). In most cases, the credit variables play an insignificant role in the impact of monetary policy shocks on output.

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Document Object Identifier (DOI): 10.3386/w4285

Published: Carnegie-Rochester Conference Series on Public Policy, Fall 1993 citation courtesy of

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