The cost channel reconsidered: a comment using an identification-robust approach

Abstract

We reexamine the empirical relevance of the cost channel of monetary policy (e.g., <link rid="b21">Ravenna and Walsh 2006), employing recently developed moment-conditions inference methods, including identification-robust procedures. Using U.S. data, our results suggest that the cost channel effect is poorly identified and we are thus unable to corroborate the previous results in the literature.