Political Intervention and Monetary Transmission: A Theoretical Note ()
ABSTRACT
Within a theoretical framework, the paper analyzes
the impact of government intervention in the credit market on bank lending. The
results indicate that in the short-run, a monetary expansion lowers lending
that is not susceptible to political intervention by a magnitude that is higher
than loans that are impacted by political
influence. In the long run, a monetary expansion is observed to
uniformly raise bank lending, consistent with the jawboning hypothesis.
Share and Cite:
Ghosh, S. (2022) Political Intervention and Monetary Transmission: A Theoretical Note.
Theoretical Economics Letters,
12, 451-462. doi:
10.4236/tel.2022.122025.
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