How Effective Is Monetary Transmission In Developing Countries
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How Effective Is Monetary Transmission In Low Income Countries A Survey Of The Empirical Evidence
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Author : Ms.Prachi Mishra
language : en
Publisher: International Monetary Fund
Release Date : 2012-06-01
How Effective Is Monetary Transmission In Low Income Countries A Survey Of The Empirical Evidence written by Ms.Prachi Mishra and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-06-01 with Business & Economics categories.
This paper surveys the evidence on the effectiveness of monetary transmission in low-income countries. It is hard to come away from this review with much confidence in the strength of monetary transmission in such countries. We distinguish between the "facts on the ground" and "methodological deficiencies" interpretations of the absence of evidence for strong monetary transmission. We suspect that "facts on the ground" are an important part of the story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.
How Effective Is Monetary Transmission In Developing Countries
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Author : Prachi Mishra
language : en
Publisher:
Release Date : 2011
How Effective Is Monetary Transmission In Developing Countries written by Prachi Mishra and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with Transmission mechanism (Monetary policy) categories.
This paper surveys the evidence on the effectiveness of monetary transmission in developing countries. We summarize the arguments for expecting the bank lending channel to be the dominant means of monetary transmission in such countries, and present a simple model that suggests why this channel may be both weak and unreliable under the conditions that usually characterize those economies. Next, we review the empirical methodologies that have been employed in the recent literature to assess monetary policy effectiveness, both in developing countries as well as in industrial and emerging economies, essentially based on vector autoregressions (VARs). It is very hard to come away from this review of the evidence with much confidence in the strength of monetary transmission in developing countries. We distinguish between the 'facts on the ground' and 'methodological deficiencies' interpretations of the absence of evidence for strong monetary transmission. We suspect, however, that 'facts on the ground' are indeed an important part of the story. The fact that a wide range of empirical approaches have failed to yield evidence of effective monetary transmission in developing countries, and that the strongest evidence for effective monetary transmission has arisen for relatively prosperous and more institutionally-developed countries such as some central and Eastern European transition economies (at least in the later stages of their transition) and Tunisia, makes us doubt whether methodological shortcomings are the whole story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.
Monetary Transmission In Developing Countries
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Author : Ms.Prachi Mishra
language : en
Publisher: International Monetary Fund
Release Date : 2016-08-08
Monetary Transmission In Developing Countries written by Ms.Prachi Mishra and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-08-08 with Business & Economics categories.
We examine the strength of monetary transmission in India, using a conventional structural VAR methodology. We find that a tightening of monetary policy is associated with a significant increase in bank lending rates and conventional effects on the exchange rate, though pass-through to lending rates is only partial and exchange rate effects are weak. We could find no significant effects on real output or the inflation rate. Though the message for the effectiveness of monetary transmission in India is therefore mixed, our results for India are more favorable than is often found for other developing countries.
How Effective Is Monetary Transmission In Low Income Countries A Survey Of The Empirical Evidence
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Author : Prachi Mishra
language : en
Publisher:
Release Date : 2015
How Effective Is Monetary Transmission In Low Income Countries A Survey Of The Empirical Evidence written by Prachi Mishra and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
This paper surveys the evidence on the effectiveness of monetary transmission in low-income countries. It is hard to come away from this review with much confidence in the strength of monetary transmission in such countries. We distinguish between the "facts on the ground" and "methodological deficiencies" interpretations of the absence of evidence for strong monetary transmission. We suspect that "facts on the ground" are an important part of the story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.
Evaluating The Effectiveness Of The Monetary Transmission Mechanism In Malaysia
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Author : Shariman M. N. Alwani
language : en
Publisher:
Release Date : 2006
Evaluating The Effectiveness Of The Monetary Transmission Mechanism In Malaysia written by Shariman M. N. Alwani and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Transmission mechanism (Monetary policy) categories.
Monetary Transmission In Low Income Countries
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Author : Ms.Prachi Mishra
language : en
Publisher: International Monetary Fund
Release Date : 2010-10-01
Monetary Transmission In Low Income Countries written by Ms.Prachi Mishra and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-10-01 with Business & Economics categories.
This paper reviews monetary transmission mechanisms in low-income countries (LICs) to identify aspects of the channels that may operate differently in LICs relative to advanced and emerging economies. Given the weak institutional frameworks, reduced role of securities markets, imperfect competition in the banking sector and the resulting high cost of bank lending to private firms, the traditional channels (interest rate, bank lending, and asset price) are impaired in LICs. The exchange rate channel is also undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature.
Monetary Policy Transmission In Emerging Markets And Developing Economies
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Author : Mr.Luis Brandao-Marques
language : en
Publisher: International Monetary Fund
Release Date : 2020-02-21
Monetary Policy Transmission In Emerging Markets And Developing Economies written by Mr.Luis Brandao-Marques and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-02-21 with Business & Economics categories.
Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.
The Transmission Mechanism For Monetary Policy In Developing Countries
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Author : Mr.Peter Montiel
language : en
Publisher: International Monetary Fund
Release Date : 1990-05-01
The Transmission Mechanism For Monetary Policy In Developing Countries written by Mr.Peter Montiel and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990-05-01 with Business & Economics categories.
In many developing countries the financial system is characterized by the absence of organized markets for securities and equities, by capital controls, and by legal ceilings on bank borrowing and lending rates, a situation which gives rise to parallel markets for foreign exchange and informal loan markets. This paper analyzes how changes in monetary policy instruments (bank credit, administered interest rates, required reserve ratios, and intervention in the parallel exchange market) are transmitted to domestic aggregate demand in a financially-repressed economy. Such an analysis is necessary to understand how the move to a more market-oriented system would affect the economy in the short run.
Var Meets Dsge
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Author : Bin Grace Li
language : en
Publisher: International Monetary Fund
Release Date : 2016-04-11
Var Meets Dsge written by Bin Grace Li and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-04-11 with Business & Economics categories.
VAR methods suggest that the monetary transmission mechanism may be weak and unreliable in low-income countries (LICs). But are structural VARs identified via short-run restrictions capable of detecting a transmission mechanism when one exists, under research conditions typical of these countries? Using small DSGEs as data-generating processes, we assess the impact on VAR-based inference of short data samples, measurement error, high-frequency supply shocks, and other features of the LIC environment. The impact of these features on finite-sample bias appears to be relatively modest when identification is valid—a strong caveat, especially in LICs. However, many of these features undermine the precision of estimated impulse responses to monetary policy shocks, and cumulatively they suggest that “insignificant” results can be expected even when the underlying transmission mechanism is strong.
Monetary Policy Transmission In Emerging Asia
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Author : Nasha Ananchotikul
language : en
Publisher: International Monetary Fund
Release Date : 2015-09-28
Monetary Policy Transmission In Emerging Asia written by Nasha Ananchotikul and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-09-28 with Business & Economics categories.
Given the heavy reliance on bank lending as the main source of financing in most Asian economies, banks could potentially play a pivotal role in monetary policy transmission. However, we find that Asia's bank lending channel or, more broadly, credit channel of domestic monetary policy is not very strong at the aggregate level. Using bank-level data for nine Asian economies during 2000-2013, we show that heterogeneity of bank characteristics (e.g., ownership type, financial position), degree of foreign bank penetration of the domestic banking sector, and global financial conditions all have a bearing on the response of domestic credit to changes in domestic monetary policy, and may account for the apparently weak credit channel at aggregate level.