The industrial impact of monetary policy

Quarterly Bulletin 1996 Q3
Published on 01 September 1996

By Joe Ganley of the Bank’s Markets and Trading Systems Division and Chris Salmon of the Bank’s Monetary Assessment and Strategy Division.

This article investigates the disaggregated effects of monetary policy on the output of 24 sectors of the UK economy. The purpose of the analysis is to identify the speed and magnitude of firms’ reactions in these sectors to an unexpected monetary tightening; and to examine whether these responses provide any evidence on the transmission mechanism of monetary policy. The results indicate that the sensitivity of output to changes in monetary conditions differs markedly across industries.

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