December 2013 issue contents
Transmission Lags of Monetary Policy: A Meta-Analysis

by Tomas Havraneka,b and Marek Rusnakb,c


The transmission of monetary policy to the economy is generally thought to have long and variable lags. In this paper we quantitatively review the modern literature on monetary transmission to provide stylized facts on the average lag length and the sources of variability. We collect sixty-seven published studies and examine when prices bottom out after a monetary contraction. The average transmission lag is twenty-nine months, and the maximum decrease in prices reaches 0.9 percent on average after a 1-percentage-point hike in the policy rate. Transmission lags are longer in developed economies (twenty-five to fifty months) than in post-transition economies (ten to twenty months). We find that the factor most effective in explaining this heterogeneity is financial development: greater financial development is associated with slower transmission.

JEL Codes: C83, E52.

Full article (PDF, 38 pages 7216 kb)

a Research Department, Czech National Bank 
b Institute of Economic Studies, Charles University, Prague 
c Financial Stability Department, Czech National Bank