The cost-channel of monetary transmission under positive trend inflation

Qureshi, Irfan A. and Ahmad, Ghufran ORCID: https://orcid.org/0000-0002-2454-9335 2021. The cost-channel of monetary transmission under positive trend inflation. Economics Letters 201 , 109802. 10.1016/j.econlet.2021.109802

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Abstract

We study the dynamics of the cost-channel of monetary transmission mechanism using a New-Keynesian model with nonzero steady state inflation. We show that the effects of the cost-channel depend almost entirely on the level of trend inflation in the economy. These results are demonstrated analytically and numerically by focusing on the impact of monetary policy shocks on the response of inflation and output.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Elsevier
ISSN:	0165-1765
Date of First Compliant Deposit:	16 February 2023
Date of Acceptance:	23 February 2021
Last Modified:	14 May 2023 15:48
URI:	https://orca.cardiff.ac.uk/id/eprint/157075

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