This is “Monetary Policy Transmission Mechanisms”, chapter 24 from the book Finance, Banking, and Money (v. 2.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here.

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you.
DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

Chapter 24 Monetary Policy Transmission Mechanisms

Chapter Objectives

By the end of this chapter, students should be able to:

  1. Explain why structural models are generally superior to reduced-form models.
  2. Describe the types of evidence that can strengthen researchers’ conviction that a reduced-form model has the direction of causation right, say, from money (M) to output (Y).
  3. Describe the evidence that money matters.
  4. List and explain several important monetary policy transmission mechanisms.