Article: Asymmetric Monetary Effects on Interest Rates across Monetary Policy Stances.

RECENTLY THERE HAS BEEN a great deal of work on the construction of empirical measures for exogenous monetary shocks and on the empirical modeling of monetary policy effects. Extending the empirical literature on the effects of monetary policy on interest rates in a new direction, this paper investigates how the dynamic response of interest rates to a monetary shock varies with the state of the monetary policy stance, which is assigned to one of the three regimes: tight, neutral, and loose. Unlike the conventional reduced-form approach that assumes invariant parameters to monetary policy, we examine a regime-dependent, reduced-form model in which coefficients change over ...

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