Presenter: Boris Hofmann Affiliation: Bank for International Settlements, Monetary and Economic Department Paper: Losing Traction? The Real Effects of Monetary Policy when Interest Rates are Low Date: June 14, 2022 Time: 13:00 GMT (16:00 Israel Time) Abstract: Are there limits to how far reductions in interest rates can boost aggregate demand? In particular, as interest … Read more
Presenter: Cristina Manea Affiliation: Deutsche Bundesbank, Research Centre Paper: Big Techs and the Credit Channel of Monetary Policy Date: May 16, 2022 Time: 13:00 GMT Abstract: We study how the entry of large technology firms such as Amazon, Alibaba or Facebook (“Big Techs”) into finance may affect the transmission of monetary policy. Our empirical analysis … Read more
Presenter: Toni Whited Affiliation: University of Michigan, Ross School of Business. Paper: Bank Market Power and Monetary Policy Transmission: Evidence from a Structural Estimation (Journal of Finance, forthcoming). Date: January 4, 2022 Time: 13:00 GMT Abstract: We quantify the impact of bank market power on monetary policy transmission through banks to borrowers. We estimate a … Read more
How does the health of creditors affect the pass-through of monetary policy to households? In a financial crisis, asset losses among creditors can either dampen or amplify the effects of monetary policy on lending, depending on how these losses and policies interact with financial frictions. Frictions such as leverage constraints may hinder creditor responses, however easing may instead alleviate frictions that would otherwise constrain lending. Using data on the universe of US credit unions, I document that asset losses increase the sensitivity of consumer credit to monetary policy. Identification exploits plausibly exogenous variation in asset losses and high frequency identification of monetary policy shocks. I find that a one standard deviation asset loss increases the response of credit union lending to a 10 basis point fall in the two-year Treasury rate from a 0.86 to 1.15 percentage point increase. The estimates imply that constraints on monetary policy become more costly in a financial crisis characterized by creditor asset losses and that an additional benefit of monetary easing is that it weakens the causal, contractionary effect of asset losses.