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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.