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Causal ordering and ‘The bank lending channel’

✍ Scribed by Stephen J. Perez


Book ID
101285641
Publisher
John Wiley and Sons
Year
1998
Tongue
English
Weight
148 KB
Volume
13
Category
Article
ISSN
0883-7252

No coin nor oath required. For personal study only.

✦ Synopsis


The bank lending channel implies the Federal Reserve can in¯uence real income by controlling the level of intermediated loans. Using the notion of causality developed by Simon (1953) and the causal order methodology developed by Hoover (1990), I test for an operative bank lending channel in the transmission mechanism of monetary policy. I ®nd loans did cause real income; there is evidence that a bank lending channel did exist in the 1960s. The data appears to show, however, that by the early 1990s the bank lending channel was no longer operative.


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