Monetary Transmission in Low Income Countries
AbstractThis 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/223.
Date of creation: 01 Oct 2010
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Other versions of this item:
- Mishra, Prachi & Montiel, Peter J & Spilimbergo, Antonio, 2010. "Monetary transmission in low income countries," CEPR Discussion Papers 7951, C.E.P.R. Discussion Papers.
- Prachi Mishra & Antonio Spilimbergo & Peter Montiel, 2010. "Monetary transmission in low income countries," Center for Development Economics 2010-06, Department of Economics, Williams College.
- Prachi Mishra & Antonio Spilimbergo & Peter Montiel, 2010. "Monetary transmission in low income countries," Department of Economics Working Papers 2010-14, Department of Economics, Williams College.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-16 (All new papers)
- NEP-CBA-2010-10-16 (Central Banking)
- NEP-MON-2010-10-16 (Monetary Economics)
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