Shaken or stirred? Financial deregulation and the monetary transmission mechanism in Norway

Is there a credit channel for monetary policy? Has the deregulation of fina ncial markets had any temporary or permanent effects on the monetary transm ission mechanism? We present empirical evidence on these issues for Norway by estimating a dynamic system of money, credit, real income and inflation. We find that the deregulation process has not caused any permanent shifts in the long-run demand functions. Within a small simultaneous dynamic model , there is some evidence for the credit view of the monetary transmission m echanism, as both credit and money exhibit strong and stable effects on agg regate demand.