Hülsewig, Oliver (contributor); Mayer, Eric (contributor); … - 2006
This paper presents a New Keynesian model that dwells on the role of banks in the cost channel of monetary policy … market rate to the loan rate is incomplete, and, second, the cost channel is operating, but the effect is weak since … inflation is driven by real unit labor costs rather than the loan rate. Our main conclusion is that the strength of the cost …