The Transmission of Monetary Policy under the Microscope


Martin Blomhoff Holm

Andreas Tischbirek

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2020-03 | February 1, 2021

We investigate the transmission of monetary policy to household consumption using administrative data on the universe of households in Norway. Based on identified monetary policy shocks, we estimate the dynamic responses of consumption, income, and saving along the liquid asset distribution of households. For low-liquidity but also for high-liquidity households, changes in disposable income are associated with a sizable consumption reaction. The impact consumption response is closely linked to interest rate exposure, which is negative at the bottom but positive at the top of the distribution. Indirect effects of monetary policy gradually build up and eventually outweigh the direct effects.

Article Citation

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

About the Author
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Pascal Paul is a senior economist in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Pascal Paul