Disintermediation and Monetary Transmission in Canada
IMF Working Papers, March 1, 2006
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- Disintermediation and Monetary Transmission in Canada
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Bibliographic details
- Authors: Jorge Roldos
- Published: March 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451863444.001
Key findings
- VAR models show a clear break in monetary transmission beginning in 1988, after changes in financial regulation initiated the process of financial disintermediation.
- Estimates of the interest rate elasticity of aggregate demand in IS equations increase in the 1990's, suggesting that the systematic component of monetary policy has become more relevant.
- The ratio of direct to indirect finance, a measure of disintermediation, contributes to explain changes in the interest rate elasticity.
- The evidence points to an increased effectiveness of monetary policy associated with a larger use of market-based sources of finance.
Methodologies used
- Vector autoregression (VAR) models to detect structural breaks in monetary transmission.
- IS-equation estimation of the interest rate elasticity of aggregate demand to assess changes in the sensitivity of demand to policy rates.
Subjects and keywords
- Subject: Asset prices, Bank credit, Corporate sector, Loans, Vector autoregression
- Keywords: exchange rate, monetary policy, WP
Content in this bundle
- _wp0684 - References