Working Papers

2020-03 | November 2020


The Transmission of Monetary Policy under the Microscope


We investigate the transmission of monetary policy to household consumption using detailed administrative data on the universe of households in Norway. Based on a novel series of identified monetary policy shocks, we estimate the dynamic responses of consumption, income, and saving along the liquid asset distribution of households. We find that low-liquidity but also high-liquidity households show strong responses, interest rate changes faced by borrowers and savers feed into consumption, and indirect effects of monetary policy outweigh direct effects, albeit with a delay. Overall, the results support the importance of financial frictions, cash-flow channels, and heterogeneous effects of monetary policy.

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Article Citation

Holm, Martin Blomhoff, Pascal Paul, and Andreas Tischbirek. 2020. "The Transmission of Monetary Policy under the Microscope," Federal Reserve Bank of San Francisco Working Paper 2020-03. Available at