Imperfect Capital Markets and the Monetarist Black Box: Liquidity Constraints, Inflation and the Asymmetric Effects of Interest Rate Policy

摘要

The paper examines a channel of transmission of monetary policy different from those usually considered, which works through its effects on liquidity constraints on expenditure. The analysis is based on a model in which capital markets are 'imperfect', in the sense that people are not permitted to borrow unlimited sums of money (subject only to a lifetime budget constraint) at some given interest rate. While it is of course well-known that there is often a limit to the amount individuals can borrow, the analysis of the significance of such liquidity constraints in the operation of monetary policy appears to have been neglected.