Czech paper evaluates monetary policy lags


Greater financial development is associated with the slower transmission of monetary policy, according to a working paper published by the Czech National Bank today (November 27).

The authors, Tomáš Havránek and Marek Rusnák, review 67 published studies on monetary transmission and examine the speed of the fall in prices following a contraction in monetary policy, and the depth to which they fall.

The average transmission lag is 29 months, the paper finds, while a 1 percentage point increase in