INTEREST-RATES AND THE CHANNELS OF MONETARY TRANSMISSION - SOME SECTORAL ESTIMATES

We estimate a small sectoral VAR model of the UK macroeconomy. This mo del is then used to simulate the effects of an exogenous monetary poli cy shock upon asset prices, bank balance sheet variables and final tar get variables (activity and prices), for the personal and corporate se ctors. Significant sectoral differences are found among the channels o f monetary transmission; In addition, the use of sectoral data facilit ates the identification of distinct money and credit channels in the t ransmission of monetary policy. These results contrast with the ambigu ous findings on the roles of money and credit in the literature to dat e.