Those who think the credit channel is important for monetary policy will tend to favor strict adherence to a Taylor Rule.

Question

Quizplus · Accepted Answer

The credit channel of monetary policy emphasizes the role of banks and other financial intermediaries in the transmission of monetary policy, focusing on how policy changes affect lending, borrowing costs, and ultimately investment and consumption. The Taylor Rule, on the other hand, is a guideline for setting interest rates based on inflation and economic output. Those who favor the credit channel might support more nuanced approaches that also consider the condition of financial markets and institutions, not just strict adherence to a formula like the Taylor Rule.

Those Who Think the Credit Channel Is Important for Monetary