NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is There a `Credit Channel' for Monetary Policy?

R. Glenn Hubbard

NBER Working Paper No. 4977 (Also Reprint No. r2013)
Issued in December 1994
NBER Program(s):   ME

This paper argues that the terms `money view' and `credit view' are not always well defined in theoretical and empirical debates over the transmission mechanism of monetary policy. Recent models of information and incentive problems in financial markets suggest the usefulness of decomposing the transmission mechanism into two parts: one related to effects of policy-induced changes on the overall level of real costs of funds, and one related to `financial accelerator' effects stemming from impacts of policy actions on the financial positions of borrowers or intermediaries. The results presented here support the idea that the spending decisions of a significant group of borrowers are influenced by their balance sheet condition. Whether a bank-lending channel is operative is less clear, however. More micro evidence at the level of individual borrower-lender transactions is needed to resolve this question.

download in pdf format
   (558 K)

email paper

This paper is available as PDF (558 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4977

Published: Federal Reserve Bank of St. Louis Review, vol. 77, no. 3, pp. 63-77,(May/June 1995)/

Users who downloaded this paper also downloaded these:
Ramey w4285 How Important is the Credit Channel in the Transmission of Monetary Policy?
Mishkin w5464 The Channels of Monetary Transmission: Lessons for Monetary Policy
Bernanke and Gertler w5146 Inside the Black Box: The Credit Channel of Monetary Policy Transmission
Kashyap and Stein Monetary Policy and Bank Lending
Kashyap and Stein w4317 Monetary Policy and Bank Lending
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us