Citation

Discussion Paper Details

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Title: Financial Intermediation and Monetary Policies in the World Economy

Author(s): Vittorio Grilli and Nouriel Roubini

Publication Date: July 1991

Keyword(s): Financial Intermediation, International Transmission and Monetary Policy

Programme Area(s): International Macroeconomics

Abstract: In this paper we investigate the role of credit institutions in transmitting monetary shocks to the domestic economy and to the output of the rest of the world. In modelling the monetary and financial sector of the economy we distinguish between monetary injections that take place via lump-sum transfers to individuals and those that involve increased credit to the commercial banking sector through discount window operations. We distinguish between the discount rate of the central bank and the lending and borrowing interest rates of commercial banks, which we assume are also subject to reserve requirements. We find that domestic output increases after a steady state increase in monetary injections via increases in domestic credit, but an increase in the steady state level of monetary transfers reduces the level of output.

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Bibliographic Reference

Grilli, V and Roubini, N. 1991. 'Financial Intermediation and Monetary Policies in the World Economy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=566