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Financial shocks and the maturity of the monetary policy rate

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  • Gerlach-Kristen, Petra
  • Rudolf, Barbara

Abstract

Monetary policy is typically formulated with a very short-term interest rate, while longer rates matter in the transmission mechanism. We show that financial market shocks impact less on the macroeconomy if policy is set with a longer rate.

Suggested Citation

  • Gerlach-Kristen, Petra & Rudolf, Barbara, 2010. "Financial shocks and the maturity of the monetary policy rate," Economics Letters, Elsevier, vol. 107(3), pages 333-337, June.
    • Handle: RePEc:eee:ecolet:v:107:y:2010:i:3:p:333-337
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    Cited by:

    1. Dr. Petra Gerlach & Dr. Barbara Rudolf, 2010. "Macroeconomic and interest rate volatility under alternative monetary operating procedures," Working Papers 2010-12, Swiss National Bank.
    2. Jones, Callum & Kulish, Mariano, 2013. "Long-term interest rates, risk premia and unconventional monetary policy," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2547-2561.
    3. Yüksel, Ebru & Metin-Ozcan, Kivilcim & Hatipoglu, Ozan, 2013. "A survey on time-varying parameter Taylor rule: A model modified with interest rate pass-through," Economic Systems, Elsevier, vol. 37(1), pages 122-134.
    4. Heryan, Tomas & Stavarek, Daniel, 2010. "How related are interbank and lending interest rates? Evidence on selected EU countries," MPRA Paper 27276, University Library of Munich, Germany.
    5. Tomáš Heryán & Daniel Stavárek, 2010. "How Related are Interbank and Lending Interest Rates? Evidence on Selected European Union Countries," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2010(3), pages 42-55.
    6. Shehu El-Rasheed & Hussin Abdullah & Jauhari Dahalan, 2017. "Monetary Uncertainty and Demand for Money Stability in Nigeria: An Autoregressive Distributed Lag Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 601-607.

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