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Why Is There an Effectiveness Lag for Monetary Policy

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Why is there an effectiveness lag for monetary policy?


Definitions:

Premium

In finance, a premium refers to the amount by which the price of a financial asset or insurance policy exceeds its intrinsic or face value.

Recorded

The act of entering financial transactions into the accounting records of a company.

Effective-Interest Method

A way of calculating the amortized cost of a bond and of allocating interest expense over the bond's life, reflecting the actual interest rate earned.

Discount on Bonds Payable

The difference between the face value of a bond and its selling price, when sold for less than its face value.

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