TY  - JOUR
AU  - Barth, Marvin J, III
AU  - Ramey, Valerie A
TI  - The Cost Channel of Monetary Transmission
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7675
PY  - 2000
Y2  - April 2000
DO  - 10.3386/w7675
UR  - http://www.nber.org/papers/w7675
L1  - http://www.nber.org/papers/w7675.pdf
N1  - Author contact info:
Valerie A. Ramey
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-2388
Fax: 858/534-7040
E-Mail: vramey@ucsd.edu
M1  - published as Marvin J. Barth III, Valerie A. Ramey. "The Cost Channel of Monetary Transmission," in Ben S. Bernanke and Kenneth Rogoff, editors, "NBER Macroeconomics Annual 2001, Volume 16" MIT Press (2002)

AB  - This paper presents evidence that the  cost channel' may be an important part of the monetary transmission mechanism. We argue that if working capital is an essential component of production and distribution, monetary contractions can affect output through a supply channel as well as the traditional demand-type channels. We specify an industry equilibrium model and use it to interpret the results of a VAR analysis. We find that following a monetary contraction, many industries exhibit periods of falling output and rising price-wage ratios, consistent with a supply shock in our model. We also show that the effects are noticeably more pronounced during the period before 1979.
ER  -