The Role of Asset Prices in the Monetary Transmission Mechanism
Year: 2001 Volume: 51 Issue: 9 Pages: 488-506
Abstract: The paper examines the theoretical background of the role asset prices play in the monetary transmission mechanism. The authors firstly consider the determinants of asset prices and their contribution to monetary policy implementation. Secondly, they offer a definition of the key channels of monetary transmission mechanism, particularly the asset prices channel. The authors then concentrate on assets in the Czech Republic including the main determinants of asset prices. Finally, the authors use econometric methods to analyze relations between asset prices and macroeconomics aggregates and between asset prices themselves. The results reveal that most of the relations are weak, nevertheless, there are opportunities for asset prices to be used as subsidiary indicators.
JEL classification: E44, G12
Keywords: monetary policy; asset prices; monetary transmission mechanism
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