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  5. The Monetary Transmission Mechanism: An Empirical Framework

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

The Monetary Transmission Mechanism: An Empirical Framework

  • John B. Taylor
Journal of Economic Perspectives
vol. 9, no. 4, Fall 1995
(pp. 11–26)
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Abstract

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.

Citation

Taylor, John B. 1995. "The Monetary Transmission Mechanism: An Empirical Framework." Journal of Economic Perspectives, 9 (4): 11–26. DOI: 10.1257/jep.9.4.11

JEL Classification

  • E52 Monetary Policy
  • E43 Determination of Interest Rates; Term Structure of Interest Rates
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