Braking distance of monetary policy

A certain period of time elapses between the adoption of a measure by the central bank and its impact on the variables concerned. This period of time is often very difficult to estimate in advance because – it is situational: dependent on the particular state of affairs, determined by the temporary combination of circumstances, and – it also depends on the expectations of economic agents. – Under normal circumstances, the ECB estimates that it takes four to six quarters for a change in key interest rates to have its maximum effect on GDP. – See targeting, medium-term, Elizabeth question, cost-of-capital effect, long-lag theory, long-run, medium-term, models, monetary policy, model uncertainty, transmission mechanism, monetary, interest rate pass-through.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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