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Shaken or Stirred? Financial Deregulation and the Monetary Transmission Mechanism in Norway
Author(s) -
Bardsen Gunnar,
Klovland Jan Tore
Publication year - 2000
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00215
Subject(s) - economics , deregulation , monetary economics , monetary policy , inflation (cosmology) , credit channel , aggregate demand , transmission (telecommunications) , mechanism (biology) , macroeconomics , inflation targeting , philosophy , physics , electrical engineering , epistemology , theoretical physics , engineering
Is there a credit channel for monetary policy? Has the deregulation of financial markets had any temporary or permanent effects on the monetary transmission mechanism? We present empirical evidence on these issues for Norway by estimating a dynamic system of money, credit, real income and inflation. We find that the deregulation process has not caused any permanent shifts in the long‐run demand functions. Within a small simultaneous dynamic model, there is some evidence for the credit view of the monetary transmission mechanism, as both credit and money exhibit strong and stable effects on aggregate demand. JEL classification : E 50; E 44; C 51