The role of asset prices in the monetary transmission mechanism

The paper examines the theoretical background of the role asset prices play in the monetary transmission mechanism. The authors firstly consider the d eterminants of asset prices and their contribution to monetary policy imple mentation. Secondly, they offer a definition of the key channels of monetar y transmission mechanism, particularly the asset prices channel. The author s then concentrate on assets in the Czech Republic including the main deter minants of asset prices. Finally, the authors use econometric methods to an alyze relations between asset prices and macroeconomics aggregates and betw een asset prices themselves. The results reveal that most of the relations are weak; nevertheless, there are opportunities for asset prices to be used as subsidiary indicators.