The Monetary Transmission Mechanism: An Empirical Framework | Zendy

John B. Taylor | Zendy

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The Monetary Transmission Mechanism: An Empirical Framework

Author(s) -

John B. Taylor

Publication year - 1995

Publication title -

the journal of economic perspectives

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 9.614

H-Index - 196

eISSN - 1944-7965

pISSN - 0895-3309

DOI - 10.1257/jep.9.4.11

Subject(s) - monetary policy , economics , monetary transmission mechanism , monetary economics , mechanism (biology) , interest rate , exchange rate , macroeconomics , transmission (telecommunications) , rational expectations , credit channel , monetary hegemony , inflation targeting , computer science , telecommunications , philosophy , epistemology

This paper provides an overview of the monetary transmission mechanism describing the impact of changes in monetary policy on real GDP. Changes in financial market prices--including long-term interest rates and exchange rates--are the main vehicle for the transmission of policy. The framework incorporates rational expectations and policy rules. It is empirical and appears to fit the facts well.

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