Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
966157 | Journal of Macroeconomics | 2008 | 15 Pages |
Abstract
This paper investigates the business cycle implications of limited pass-through from market interest rates to retail interest rates based on a calibrated sticky price model. The main result of the paper is that limited interest rate pass-through reduces output volatility to a modest extent as long as the pass-through is complete at least in the long-run. Larger volatility reductions are obtained if the long-run pass-through is incomplete. However, in this case output volatility is reduced at the cost of higher inflation volatility.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Johann Scharler,