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Monetary policy transmission in an emerging market setting

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  • Bhattacharya, Rudrani

    () (National Institute of Public Finance and Policy)

  • Patnaik, Ila

    () (National Institute of Public Finance and Policy)

  • Shah, Ajay

    () (National Institute of Public Finance and Policy)

Abstract

Some emerging economies have a relatively ineffective monetary policy transmis- sion 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 exchange-rate 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.

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Bibliographic Info

Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 11/78.

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Length: 22
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:npf:wpaper:11/78

Note: Working Paper 78, 2011
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Web page: http://www.nipfp.org.in

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Keywords: Monetary policy transmission ; Exchange rate pass-through ; Exchange rate regime ; Financial development ; India;

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Cited by:
  1. André Nassif & Carmem Feijó & Eliane Araújo, 2011. "The trend of the real exchange rate overvaluation in open emerging economies: the case of Brazil," Working Papers 0111, Universidade Federal do Paraná, Department of Economics.
  2. Jamilov, Rustam, 2012. "Channels of Monetary Transmission in the CIS," MPRA Paper 39568, University Library of Munich, Germany.

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