Banks and the State-Dependent Effects of Monetary Policy
Martin S. Eichenbaum, Federico Puglisi, Sergio Rebelo, Mathias Trabandt
NBER Working Papers,
No. 33523,
2025
Abstract
We show that the response of banks’ net interest margin (NIM) to monetary policy shocks is state dependent. Following a period of low (high) Federal Funds rates, a contractionary monetary policy shock leads to an increase (decrease) in NIM. Aggregate economic activity exhibits a similar state-dependent pattern. To explain these dynamics, we develop a banking model in which social interactions influence households’ attentiveness to deposit interest rates. We embed that framework within a nonlinear heterogeneous-agent NK model. The estimated model accounts well quantitatively for our key empirical findings.
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Konjunktur aktuell: Frostige Aussichten für die deutsche Wirtschaft
Konjunktur aktuell,
No. 4,
2024
Abstract
Zur Jahreswende dürfte die weltweite Produktion weiterhin in etwa so schnell wie in der Dekade vor der Pandemie expandieren. Die Konjunktur im Euroraum ist nur verhalten, und die Stagnation der deutschen Wirtschaft setzt sich fort. Die Industrie verliert an internationaler Wettbewerbsfähigkeit. Unternehmen und Verbraucher halten sich aufgrund unklarer wirtschaftspolitischer Aussichten mit ihren Ausgaben zurück. Das Bruttoinlandsprodukt dürfte im Jahr 2024 um 0,2% sinken und im Jahr 2025 um 0,4% expandieren.
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Halle Institute for Economic Research
Slight upturn on the horizon, structural problems remain As the year draws to a close, it remains uncertain whether the German economy is on a path to recovery, as export weakness…
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