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Conceptualizing interdependences between regulatory and monetary policies. Some preliminary considerations

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Abstract

In this paper we investigate the interplay between regulatory and monetary policies. We analyze how changes in institutional settings modify the functioning of various channels of monetary transmission. The paper begins with a brief presentation of the main channels of monetary transmission, including credit channel, exchange rate channel, Tobin q theory, and the credit channel. After that we define a positive institutional change and we check how such adjustments can be put into the logic of monetary transmission. We show that the most profound way institutions impact the monetary transmission is via its effect on the elasticity of investments to changes in interest rates.

Suggested Citation

  • Lukasz Hardt, 2011. "Conceptualizing interdependences between regulatory and monetary policies. Some preliminary considerations," NBP Working Papers 96, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:96
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    1. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change," Introductory Chapters, in: Understanding the Process of Economic Change, Princeton University Press.
    2. Allan H. Meltzer, 1995. "Monetary, Credit and (Other) Transmission Processes: A Monetarist Perspective," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 49-72, Fall.
    3. Mishkin, Frederic S., 1978. "The Household Balance Sheet and the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 38(4), pages 918-937, December.
    4. José R. Sánchez-Fung, 2008. "One Economics, Many Recipes: Globalization, Institutions and Economic Growth," Indian Growth and Development Review, Emerald Group Publishing, vol. 1(2), pages 252-256, September.
    5. James Tobin, 1970. "Money and Income: Post Hoc Ergo Propter Hoc?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(2), pages 301-317.
    6. Niehans, Jurg, 1971. "Money and Barter in General Equilibrium with Transaction Costs," American Economic Review, American Economic Association, vol. 61(5), pages 773-783, December.
    7. Baldwin, Robert E., 2008. "One Economics, Many Recipes: Globalization, Institutions, and Economic Growth by Dani Rodrik Princeton, NJ: Princeton University Press, 2007," World Trade Review, Cambridge University Press, vol. 7(3), pages 573-575, July.
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    Cited by:

    1. Łukasz Hard, 2014. "Models of Mechanisms and their Role in Building Economic Explanations," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 37.

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    More about this item

    Keywords

    monetary transmission channels; monetary policy; regulatory policy; institutional change; financial globalization;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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