Corpus ID: 41278308

Passthrough Efficiency in the Fed ’ s New Monetary Policy Setting ? ( Preliminary )

  title={Passthrough Efficiency in the Fed ’ s New Monetary Policy Setting ? ( Preliminary )},
  author={Darrell Duffie and Arvind Krishnamurthy},
We show how the current institutional setting of U.S.-dollar money markets limits the passthrough effectiveness of the Federal Reserve’s monetary policy. We focus on frictions associated with imperfect competition, regulation, infrastructure, and other forms of institutional segmentation within money markets. We model how imperfect competition is exacerbated by costs to cash investors associated with search and information attention. We show that passthrough is further dampened by the… Expand
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