TY  - JOUR
AU  - Hubbard,R. Glenn
TI  - Is There a `Credit Channel' for Monetary Policy?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4977
PY  - 1995
Y2  - October 1995
UR  - http://www.nber.org/papers/w4977
L1  - http://www.nber.org/papers/w4977.pdf
N1  - Author contact info:
R. Glenn Hubbard
Graduate School of Business
Columbia University, 101 Uris Hall
3022 Broadway
New York, NY  10027
Tel: 212/854-3493
Fax: 212/864-6184
E-Mail: rgh1@columbia.edu, ws2187@columbia.edu
AB  - 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.
ER  -