The interactive chart library could not load. The long-run pass-through rate is β = -λ₂ / λ₁.

Error-correction speed

λ₁ = -0.40

Lagged MR coefficient

λ₂ = +0.32

Pass-through rate β

β = 0.80

λ₁: how fast the gap closes each month -0.40
-0.10 slow-0.90 fast
λ₂: long-run level anchor +0.32
+0.01 low PTR+0.99 high PTR
Market rate (MR): permanent 1% shock Deposit rate (DR): gradual adjustment Long-run level β = -λ₂ / λ₁
Reading the chart: The red line is the shock: MR rises 1% permanently at month 0. The blue curve is the DR response: it closes part of the remaining gap every month and converges to β = 0.80. Drag λ₁ to change adjustment speed; drag λ₂ to shift the long-run landing point.