Conceptualizing Interdependences between Regulatory and Monetary Policies: Some Preliminary Considerations
National Bank of Poland Working Paper No. 96
31 Pages Posted: 5 Oct 2011
Date Written: October 1, 2011
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.
Keywords: monetary transmission channels, monetary policy, regulatory policy, institutional change, financial globalization
JEL Classification: E02, E44, E52, F41, O43
Suggested Citation: Suggested Citation