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Monetary Policy Transmission Mechanism In Emerging Countries

Author

Listed:
  • Andreea ROŞOIU

    (The Academy of Economic Studies, Bucharest, Romania)

  • Iulia ROŞOIU

    (The Academy of Economic Studies, Bucharest, Romania)

Abstract

The transmission channels of monetary policy are used by central banks to accomplish the main objective of price stability in the context of sustainable economic growth. The importance of interest rate and exchange rate channels for the emerging countries Romania, Poland, Czech Republic and Hungary is analyzed by using Bayesian VAR approach with Diffuse priors over 1998Q1-2012Q3. Main result of the empirical study is that both channels are effective for the monetary policy transmission mechanism in Hungary and Czech Republic. In Romania and Poland they do not exhibit puzzles, but the impact of the macroeconomic variables is not very significant and shows very high volatility. In the context of monetary integration, exchange rate channel will become irrelevant when these countries adopt Euro currency. This change will lead instead to a powerful interest rate channel.

Suggested Citation

  • Andreea ROŞOIU & Iulia ROŞOIU, 2013. "Monetary Policy Transmission Mechanism In Emerging Countries," CrossCultural Management Journal, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 1, pages 37-49, May.
    • Handle: RePEc:cmj:journl:y:2013:i:3:rosoiua,rosoiui
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    References listed on IDEAS

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    2. Jérôme Creel* & Sandrine Levasseur, 2007. "Monetary Policy Transmission Mechanisms in the CEECs: How Important are the Differences with the Euro Area?," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(1), pages 30-59, February.
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    More about this item

    Keywords

    Monetary policy; Transmission mechanism; Bayesian VAR approach; Emerging countries; Interest rate channel; Exchange rate channel;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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