This paper investigates the role of credit market frictions in the transmission of monetary shocks in Pakistan. First, using macro data, it is shown that banking spreads are countercyclical, even it is controlled for credit risk, monetary policy and potential maturity mismatches. It is found...

The past forty years or so has seen a remarkable transformation in macro-models used by central banks, policymakers and forecasting bodies.This papers describes this trans formation from reduced-form behavioural equations estimated separately, through to contemporary micro-founded dynamic...