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Monetary Policy Transmission In Low Income Countries: Do Traditional Channels Work In Bangladesh?

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  • A.K.M. ATIQUR RAHMAN
  • TANIMA AHMED

Abstract

The paper examines the effectiveness of monetary policy transmission in the post reform period of Bangladesh using quarterly data from fiscal year 1999 to 2013. A caveat on standard VAR model is used in assessing the strength of alternative channels of monetary policy transmission. The paper finds that, monetary policy works in the desired direction in affecting both output and price level. Credit channel and exchange rate channel of monetary policy transmission seem to be quite strong. Asset price channel also works, but it is less robust. Interest rate channel of MPT works in desired direction, but it is relatively weak.

Suggested Citation

  • A.K.M. Atiqur Rahman & Tanima Ahmed, 2014. "Monetary Policy Transmission In Low Income Countries: Do Traditional Channels Work In Bangladesh?," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 6(2 (June)), pages 239-265.
    • Handle: RePEc:shc:jaresh:v:6:y:2014:i:2:p:239-265
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    More about this item

    Keywords

    Monetary policy; GDP; Price level; Exchange rate; Credit; Lending rate; Policy rate; Stock price.;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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