Banks and Monetary Shocks in Emerging Markets: How Far Can We Go with the "Credit View"?
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Summary:
This paper examines the propagation of monetary shocks in a two-good optimizing macromodel where domestic banking activity is costly and the non-tradable sector is highly dependent on domestic bank credit, as in most emerging market economies. The model develops the Bernanke-Blinder “credit view” of the monetary transmission mechanism along classical lines, with no Keynesian rigidities being imposed and the only sources of “imperfection” arising from deposit and credit-in-advance constraints. Using numerical simulations, we show that such a relatively simple model goes a long way toward explaining some key “stylized facts” of recent financial crises.
Series:
Working Paper No. 2000/068
Subject:
Bank credit Banking Consumption Credit Emerging and frontier financial markets Employment Financial markets Labor Money National accounts
English
Publication Date:
March 1, 2000
ISBN/ISSN:
9781451848984/1018-5941
Stock No:
WPIEA0682000
Pages:
37
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