{"title":"Monetary policy transmission and trade-offs in the United States: Old and new","authors":"Boris Hofmann, Gert Peersman","doi":"10.1111/infi.12452","DOIUrl":null,"url":null,"abstract":"<p>This study shows that monetary policy transmission in the United States has evolved considerably over the postwar period. Since the mid-1980s, the effects of monetary policy on credit and housing markets have become much stronger relative to the impact on gross domestic product, while the effects on inflation have become weaker. We show that these changes in the relative effects of monetary policy can be explained by several important changes in the monetary transmission mechanism and in the composition of credit aggregates. Most notably, the increasing impact of monetary policy on credit was predominantly driven by an extraordinarily higher responsiveness of mortgage credit and a larger share of mortgages in total credit. These findings imply important changes over time in short-term monetary policy trade-offs between inflation and output stability on the one hand and between financial and macroeconomic stability on the other.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"27 3","pages":"253-278"},"PeriodicalIF":1.3000,"publicationDate":"2024-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Finance","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/infi.12452","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
This study shows that monetary policy transmission in the United States has evolved considerably over the postwar period. Since the mid-1980s, the effects of monetary policy on credit and housing markets have become much stronger relative to the impact on gross domestic product, while the effects on inflation have become weaker. We show that these changes in the relative effects of monetary policy can be explained by several important changes in the monetary transmission mechanism and in the composition of credit aggregates. Most notably, the increasing impact of monetary policy on credit was predominantly driven by an extraordinarily higher responsiveness of mortgage credit and a larger share of mortgages in total credit. These findings imply important changes over time in short-term monetary policy trade-offs between inflation and output stability on the one hand and between financial and macroeconomic stability on the other.
期刊介绍：
International Finance is a highly selective ISI-accredited journal featuring literate and policy-relevant analysis in macroeconomics and finance. Specific areas of focus include: · Exchange rates · Monetary policy · Political economy · Financial markets · Corporate finance The journal''s readership extends well beyond academia into national treasuries and corporate treasuries, central banks and investment banks, and major international organizations. International Finance publishes lucid, policy-relevant writing in macroeconomics and finance backed by rigorous theory and empirical analysis. In addition to the core double-refereed articles, the journal publishes non-refereed themed book reviews by invited authors and commentary pieces by major policy figures. The editor delivers the vast majority of first-round decisions within three months.
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