Paper explores development and monetary policy transmission
Development of the financial sector only improves monetary policy transmission to some interest rates, research published by the Central Bank of Colombia finds.
María Fernanda Meneses-González and co-authors employ a two-stage empirical strategy. They first estimate monetary policy shocks for a panel of 43 countries using a Taylor rule. Then they run a panel regression to test pass-through to lending and deposit rates.
The authors find that financial development is positively associated with
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