Advanced Search
MyIDEAS: Login to save this paper or follow this series

How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence

Contents:

Author Info

  • Prachi Mishra
  • Peter Montiel

Abstract

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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=25961
Download Restriction: no

Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/143.

as in new window
Length: 48
Date of creation: 01 Jun 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/143

Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Email:
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC

Order Information:
Web: http://www.imf.org/external/pubs/pubs/ord_info.htm

Related research

Keywords: Banks; Developing countries; Eastern Europe; Monetary policy; Latin America; Low-income developing countries; Middle East and Central Asia; Monetary transmission mechanism; Transition economies; monetary transmission; aggregate demand; central bank; price level; real output; inflation; monetary aggregate; monetary fund; money stock; monetary base; government securities; foreign exchange; monetary authorities; money market; money demand; contractionary monetary policy; monetary economics; monetary policy transmission mechanism; monetary aggregates; inflation rate; discount rate; monetary policy instrument; monetary shocks; money market interest rates; monetary transmission mechanisms; monetary union; market for government securities; inflation targeting; rational expectations; aggregate demand effects; monetary policy regimes; discount rates; lower inflation; holdings of government securities; reserve ratios; central bank monetary policy; transmission of monetary policy; independent monetary policy; tight monetary policy; monetary policy instruments; real interest rates;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ben S. Bernanke & Alan S. Blinder, 1989. "The federal funds rate and the channels of monetary transmission," Working Papers 89-10, Federal Reserve Bank of Philadelphia.
  2. Giorgi Bakradze & Andreas Billmeier, 2007. "Inflation Targeting in Georgia," IMF Working Papers 07/193, International Monetary Fund.
  3. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," NBER Working Papers 5146, National Bureau of Economic Research, Inc.
  4. Gordon, David B & Leeper, Eric M, 1994. "The Dynamic Impacts of Monetary Policy: An Exercise in Tentative Identification," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(6), pages 1228-47, December.
  5. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2009. "Governance matters VIII : aggregate and individual governance indicators 1996-2008," Policy Research Working Paper Series 4978, The World Bank.
  6. Era Dabla-Norris & Holger Floerkemeier, 2006. "Transmission Mechanisms of Monetary Policy in Armenia," IMF Working Papers 06/248, International Monetary Fund.
  7. Ramey, Valerie, 1993. "How important is the credit channel in the transmission of monetary policy?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 39(1), pages 1-45, December.
  8. Kevin C. Cheng, 2006. "A VAR Analysis of Kenya's Monetary Policy Transmission Mechanism," IMF Working Papers 06/300, International Monetary Fund.
  9. Uhlig, Harald, 1999. "What are the Effects of Monetary Policy on Output? Results from an Agnostic Identification Procedure," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2137, C.E.P.R. Discussion Papers.
  10. Ewa Wrobel & Tomasz Lyziak & Jan Przystupa, 2008. "Monetary Policy Transmission in Poland: a Study of the Importance of Interest Rate and Credit Channels," SUERF Studies, SUERF - The European Money and Finance Forum, SUERF - The European Money and Finance Forum, number 2008/1 edited by Morten Balling, July.
  11. Konstantins Benkovskis, 2008. "Is there a Bank Lending Channel of Monetary Policy in Latvia? Evidence from Bank Level Data," Working Papers, Latvijas Banka 2008/01, Latvijas Banka.
  12. International Monetary Fund, 2010. "The Transmission Mechanism in Armenia," IMF Working Papers 10/270, International Monetary Fund.
  13. Rania Al Mashat & Andreas Billmeier, 2008. "The Monetary Transmission Mechanism in Egypt," Working Papers, Economic Research Forum 411, Economic Research Forum, revised Jun 2008.
  14. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2010. "Financial Institutions and Markets across Countries and over Time: The Updated Financial Development and Structure Database," World Bank Economic Review, World Bank Group, World Bank Group, vol. 24(1), pages 77-92, January.
  15. Harold Ngalawa & Nicola Viegi, 2011. "Dynamic Effects of Monetary Policy Shocks in Malawi," Working Papers 201112, University of Pretoria, Department of Economics.
  16. Georgy Ganev & Krisztina Molnar & Krzysztof Rybinski & Przemyslaw Wozniak, 2002. "Transmission Mechanism of Monetary Policy in Centraland Eastern Europe," CASE Network Reports 0052, CASE-Center for Social and Economic Research.
  17. Balázs �gert & Ronald MacDonald, 2009. "Monetary Transmission Mechanism In Central And Eastern Europe: Surveying The Surveyable," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 23(2), pages 277-327, 04.
  18. Hamid Reza Davoodi & S. V. S. Dixit & Gabor Pinter, 2013. "Monetary Transmission Mechanism in the East African Community," IMF Working Papers 13/39, International Monetary Fund.
  19. Emilio Sacerdoti, 2005. "Access to Bank Credit in Sub-Saharan Africa," IMF Working Papers 05/166, International Monetary Fund.
  20. Ben S. Bernanke & Ilian Mihov, 1998. "Measuring Monetary Policy," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(3), pages 869-902, August.
  21. Alam, Tasneem & Waheed, Muhammad, 2006. "The monetary transmission mechanism in Pakistan: a sectoral analysis," MPRA Paper 2719, University Library of Munich, Germany, revised 13 Apr 2007.
  22. Kim, Soyoung, 1999. "Do monetary policy shocks matter in the G-7 countries? Using common identifying assumptions about monetary policy across countries," Journal of International Economics, Elsevier, Elsevier, vol. 48(2), pages 387-412, August.
  23. Christiano, Lawrence J. & Eichenbaum, Martin & Evans, Charles L., 1999. "Monetary policy shocks: What have we learned and to what end?," Handbook of Macroeconomics, Elsevier, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 2, pages 65-148 Elsevier.
  24. Tomasz Åyziak & Jan Przystupa & Ewa Wróbel, 2008. "Monetary Policy Transmission Poland: A study of the importance of interest rate and credit channels," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum, SUERF - The European Money and Finance Forum.
  25. Carlyn Ramlogan, 2004. "The transmission mechanism of monetary policy: Evidence from the Caribbean," Journal of Economic Studies, Emerald Group Publishing, Emerald Group Publishing, vol. 31(5), pages 435-447, October.
  26. Kim, Soyoung & Roubini, Nouriel, 2000. "Exchange rate anomalies in the industrial countries: A solution with a structural VAR approach," Journal of Monetary Economics, Elsevier, Elsevier, vol. 45(3), pages 561-586, June.
  27. Adam Elbourne & Jakob de Haan, 2009. "Modeling Monetary Policy Transmission in Acceding Countries: Vector Autoregression Versus Structural Vector Autoregression," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 45(2), pages 4-20, March.
  28. Peter Montiel & Christopher Adam & Wilfred Mbowe & Stephen O’Connell, 2012. "Financial Architecture and the Monetary Transmission Mechanism in Tanzania," CSAE Working Paper Series 2012-03, Centre for the Study of African Economies, University of Oxford.
  29. Matousek, Roman & Sarantis, Nicholas, 2009. "The bank lending channel and monetary transmission in Central and Eastern European countries," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 321-334, June.
  30. Christopher A. Sims & Tao A. Zha, 1998. "Does monetary policy generate recessions?," Working Paper, Federal Reserve Bank of Atlanta 98-12, Federal Reserve Bank of Atlanta.
  31. Aasim M. Husain & Ashoka Mody & Nienke Oomes & Robin Brooks & Kenneth Rogoff, 2003. "Evolution and Performance of Exchange Rate Regimes," IMF Working Papers 03/243, International Monetary Fund.
  32. Prachi Mishra & Peter J Montiel & Antonio Spilimbergo, 2012. "Monetary Transmission in Low-Income Countries: Effectiveness and Policy Implications," IMF Economic Review, Palgrave Macmillan, Palgrave Macmillan, vol. 60(2), pages 270-302, July.
  33. Magnus Saxegaard, 2006. "Excess Liquidity and the Effectiveness of Monetary Policy," IMF Working Papers 06/115, International Monetary Fund.
  34. Peersman, Gert & Smets, Frank, 2001. "The monetary transmission mechanism in the euro area: more evidence from VAR analysis," Working Paper Series, European Central Bank 0091, European Central Bank.
  35. Asel Isaková, 2008. "Monetary Policy Efficiency in the Economies of Central Asia," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, Charles University Prague, Faculty of Social Sciences, vol. 58(11-12), pages 525-553, December.
  36. Ziaei, Sayyed Mahdi, 2009. "Assess The Long Run Effects Of Monetary Policy On Bank lending,Foreign Asset and Liability In MENA Countries," MPRA Paper 14331, University Library of Munich, Germany.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hamid Reza Davoodi & S. V. S. Dixit & Gabor Pinter, 2013. "Monetary Transmission Mechanism in the East African Community," IMF Working Papers 13/39, International Monetary Fund.
  2. Chance Mwabutwa & Manoel Bittencourt & Nicola Viegi, 2013. "Evolution of Monetary Policy Transmission Mechanism in Malawi: A TVP-VAR Approach," Working Papers 201327, University of Pretoria, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:12/143. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.