The State Dependent Effects Of Monetary Policy

Download or read book The State-Dependent Effects of Monetary Policy written by Hayk Kamalyan and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the state-dependent effects of monetary policy shocks. It shows that a canonical sticky-price model with real rigidity in the form of firm-specific factors can generate substantial state-dependence in the effects of monetary policy shocks. Factor specificity introduces a concave relationship between desired reset prices and aggregate demand conditions. The latter implies procyclical output responses to monetary policy shocks. This model feature is supported by empirical evidence from a smooth transition local projection model.