The Anatomy Of Monetary Policy Transmission In An Emerging Market

Author : Kodjovi M. Eklou
Publisher : International Monetary Fund
Page : 29 pages
File Size : 55,8 Mb
Release : 2023-07-07
Category : Business & Economics
ISBN : 9798400247910

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The Anatomy of Monetary Policy Transmission in an Emerging Market by Kodjovi M. Eklou Pdf

Monetary policy transmission in EMs has been found to be weak historically due to under-developed financial markets and heavy central bank intervention in FX markets that undermine the exchange rate channel. Against this background, this paper investigates the transmission of monetary policy, including the role of external factors, in Malaysia and highlight findings that could be relevant for other EMs. We find an important role for the credit and the exchange rate channels. Further, we also find a complementary role for policy tools including Foreign Exchange Intervention (FXI) and liquidity tools such as Statutory Reserve Requirement in shaping the transmission of monetary policy. We then explore the spillover effects of external global factors including global monetary policy and global commodity prices on monetary policy transmission in a small open economy such as Malaysia. The results show that while global commodity prices do not impair monetary policy transmission, global monetary policy tightening could complement domestic efforts to achieve price stability by inducing a global disinflation. Finally, monetary policy transmission is delayed and weakened in high inflationary environment, with the implication that more aggressive and preemptive policy actions may be needed in such cases.

Author : Ila Patnaik,Ajay Shah,Rudrani Bhattacharya
Publisher : International Monetary Fund
Page : 27 pages
File Size : 41,7 Mb
Release : 2011-01-01
Category : Business & Economics
ISBN : 9781455211838

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Monetary Policy Transmission in an Emerging Market Setting by Ila Patnaik,Ajay Shah,Rudrani Bhattacharya Pdf

Some emerging economies have a relatively ineffective monetary policy transmission owing to weaknesses in the domestic financial system and the presence of a large and segmented informal sector. At the same time, small open economies can have a substantial monetary policy transmission through the exchange rate channel. In order to understand this setting, we explore a unified treatment of monetary policy transmission and exchangerate pass-through. The results for an emerging market, India, suggest that the most effective mechanism through which monetary policy impacts inflation runs through the exchange rate.

Author : Mr.Luis Brandao-Marques,Mr.R. G Gelos,Mr.Thomas Harjes,Ms.Ratna Sahay,Yi Xue
Publisher : International Monetary Fund
Page : 54 pages
File Size : 54,9 Mb
Release : 2020-02-21
Category : Business & Economics
ISBN : 9781513529738

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Monetary Policy Transmission in Emerging Markets and Developing Economies by Mr.Luis Brandao-Marques,Mr.R. G Gelos,Mr.Thomas Harjes,Ms.Ratna Sahay,Yi Xue Pdf

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.

Author : Mr.Ales Bulir,Mr.Jan Vlcek
Publisher : International Monetary Fund
Page : 37 pages
File Size : 53,7 Mb
Release : 2015-11-20
Category : Business & Economics
ISBN : 9781513554235

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Monetary Transmission by Mr.Ales Bulir,Mr.Jan Vlcek Pdf

We use two alternative representations of the yield curve to test the functioning of the interest rate transmission mechanism along the yield curve based on government paper in a sample of emerging market and low-income countries. We find a robust link from shortterm policy and interbank rates to longer-term bond yields. Two policy implications emerge. First, the presence of well-developed secondary financial markets does not seem to affect transmission of short term rates along the yield curve. Second, the strength of the transmission mechanism seems to be affected by the choice of the monetary regime: countries with a credible inflation targeting regime seem to have “better behaved” yield curves than those with other monetary regimes.

Author : Aleš Buliř,Jan Vlček
Publisher : Unknown
Page : 128 pages
File Size : 53,8 Mb
Release : 2015
Category : Monetary policy
ISBN : 1513558668

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Monetary Transmission by Aleš Buliř,Jan Vlček Pdf

Author : Anonim
Publisher : Unknown
Page : 256 pages
File Size : 50,5 Mb
Release : 1998
Category : Banks and banking, Central
ISBN : UCSD:31822025728676

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The Transmission of Monetary Policy in Emerging Market Economies by Anonim Pdf

Author : Mr. Marco Arena,Mr. Rudolfs Bems,Mr. Nadeem Ilahi,Mr. Jaewoo Lee,William Lindquist,Mr. Tonny Lybek
Publisher : International Monetary Fund
Page : 81 pages
File Size : 49,9 Mb
Release : 2021-09-24
Category : Business & Economics
ISBN : 9781513593753

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Asset Purchase Programs in European Emerging Markets by Mr. Marco Arena,Mr. Rudolfs Bems,Mr. Nadeem Ilahi,Mr. Jaewoo Lee,William Lindquist,Mr. Tonny Lybek Pdf

Several emerging market central banks in Europe deployed asset purchase programs (APPs) amid the 2020 pandemic. The common main goals were to address market dysfunction and impaired monetary transmission, distinct from the quantitative easing conducted by major advanced economy central banks. Likely reflecting the global nature of the crisis, these APPs defied the traditional emerging market concern of destabilizing the exchange rate or inflation expectations and instead alleviated markets successfully. We uncover some evidence that APPs in European emerging markets stabilized government bond markets and boosted equity prices, with no indication of exchange rate pressure. Examining global and domestic factors that could limit the usability of APPs, in the event of renewed market dysfunction we see a potential scope for scaling up APPs in most European emerging markets that used APPs during the pandemic, provided that they remain consistent with the primary objective of monetary policy and keep a safe distance from the risk of fiscal dominance. As central banks in the region move towards monetary policy tightening, the tapering, ending, and unwinding of APPs must also be carefully considered. Clear and transparent communication is critical at each step of the process, from the inception to the closure of APPs, particularly when a large shock hits and triggers a major policy shift.

Author : Mr.Jonathan David Ostry,Mr.Atish R. Ghosh,Mr.Marcos Chamon
Publisher : International Monetary Fund
Page : 25 pages
File Size : 45,7 Mb
Release : 2012-02-29
Category : Business & Economics
ISBN : 9781475554281

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Two Targets, Two Instruments by Mr.Jonathan David Ostry,Mr.Atish R. Ghosh,Mr.Marcos Chamon Pdf

Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.

Author : Mr.Donal McGettigan,Mr.Kenji Moriyama,Mr.Jean F Noah Ndela Ntsama,Mr.Francois Painchaud,Mr.Haonan Qu,Mr.Chad Steinberg
Publisher : International Monetary Fund
Page : 30 pages
File Size : 53,7 Mb
Release : 2013-05-03
Category : Business & Economics
ISBN : 9781484388266

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Monetary Policy in Emerging Markets by Mr.Donal McGettigan,Mr.Kenji Moriyama,Mr.Jean F Noah Ndela Ntsama,Mr.Francois Painchaud,Mr.Haonan Qu,Mr.Chad Steinberg Pdf

In contrast to advanced markets (AMs), procyclical monetary policy has been a problem for emerging markets (EMs), with macroeconomic policies amplifying economic upswings and deepening downturns. The stark difference in policy has not been subject to extensive study and this paper attempts to address the gap. Key findings, using a large sample of EMs over the past 50 years, are: (i) EMs have adopted increasingly countercyclical monetary policy over time, although large differences remain among EMs and policies became more procyclical during the recent crisis. (ii) Inflation targeting and better institutions have been key factors behind the move to countercyclicality. (iii) Only deep financial markets allow EMs with flexible exchange rate regimes turn countercyclical. (iv) More countercyclical policy is associated with far less volatile output. The economically meaningful impact of IT on monetary policy countercyclicality and output variability is another reason in its favor, over and above better inflation outcomes.

Author : Bank for International Settlements. Monetary and Economic Dept
Publisher : Unknown
Page : 539 pages
File Size : 54,9 Mb
Release : 2008
Category : Monetary policy
ISBN : 9291317519

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Transmission Mechanisms for Monetary Policy in Emerging Market Economies by Bank for International Settlements. Monetary and Economic Dept Pdf

Author : Ms.Prachi Mishra,Mr.Peter Montiel,Mr.Antonio Spilimbergo
Publisher : International Monetary Fund
Page : 44 pages
File Size : 54,5 Mb
Release : 2010-10-01
Category : Business & Economics
ISBN : 9781455208883

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Monetary Transmission in Low Income Countries by Ms.Prachi Mishra,Mr.Peter Montiel,Mr.Antonio Spilimbergo Pdf

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.

Author : Mr.Peter Montiel
Publisher : International Monetary Fund
Page : 30 pages
File Size : 51,7 Mb
Release : 1990-05-01
Category : Business & Economics
ISBN : 9781451972801

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The Transmission Mechanism for Monetary Policy in Developing Countries by Mr.Peter Montiel Pdf

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.

Author : [Anonymus AC03334446]
Publisher : Unknown
Page : 272 pages
File Size : 41,7 Mb
Release : 2001
Category : Foreign exchange
ISBN : 9291316296

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Modelling Aspects of the Inflation Process and the Monetary Transmission Mechanism in Emerging Market Countries by [Anonymus AC03334446] Pdf

Author : Chiara Fratto,Brendan Harnoys Vannier,MissBorislava Mircheva,David de Padua,Ms.Helene Poirson Ward
Publisher : International Monetary Fund
Page : 71 pages
File Size : 43,6 Mb
Release : 2021-01-22
Category : Business & Economics
ISBN : 9781513567211

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Unconventional Monetary Policies in Emerging Markets and Frontier Countries by Chiara Fratto,Brendan Harnoys Vannier,MissBorislava Mircheva,David de Padua,Ms.Helene Poirson Ward Pdf

The COVID-19 crisis induced an unprecedented launch of unconventional monetary policy through asset purchase programs (APPs) by emerging market and developing economies. This paper presents a new dataset of APP announcements and implementation from March until August 2020 for 27 emerging markets and 8 small advanced economies. APPs’ effects on bond yields, exchange rates, equities, and debt spreads are estimated using different methodologies. The results confirm that APPs were successful in significantly reducing bond yields in EMDEs, and these effects were stronger than those of policy rate cuts, suggesting that such UMP could be important tools for EMDEs during financial market stress.

Author : Nasha Ananchotikul,Miss Dulani Seneviratne
Publisher : International Monetary Fund
Page : 34 pages
File Size : 42,9 Mb
Release : 2015-09-28
Category : Business & Economics
ISBN : 9781513506005

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Monetary Policy Transmission in Emerging Asia by Nasha Ananchotikul,Miss Dulani Seneviratne Pdf

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.