Establishing the existence and nature of changes in the conduct and transmission ofmonetary policy is key in understanding the remarkable macroeconomic performance of theUS since the mid 1980s. This paper presents evidence on a phenomenon of disintermediationoccurring during the major recessions in the 1960s and 1970s, but absent ever since. Usinga novel data set, I show that disintermediation is closely linked to the existence of depositrate ceilings under regulation Q. In a monetary DSGE model that incorporates depositrate ceilings as occasionally binding constraints, the regulation alters the behavior of moneyaggregates and exacerbates the drop in economic activity following a monetary tightening.The results of a time-varying coe±cient VAR lend support to the main theoretical predictionsof the model. In a counterfactual experiment, the presence of deposit rate ceilings explainstwo thirds of the decline in output volatility since the early 1980s.
展开▼
