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Industry Effects of Monetary Policy: Evidence from India

Author

Listed:
  • Saibal Ghosh

    (Department of Economic Analysis & Policy [DEAP], Reserve Bank of India, Mumbai.)

Abstract

The study exploits 2-digit level industry data for the period 1981-2004 to ascertain the interlinkage between a monetary policy shock and industry value added. Accordingly, we first estimate a Vector Auto Regression (VAR) model to ascertain the magnitude of a monetary policy shock on industrial output. Subsequently, we try to explain the observed heterogeneity in terms of industry characteristics. The findings indicate that (a) industries exhibit differential response to a monetary tightening and (b) both interest rate and financial accelerator variables tend to be important in explaining the differential response.

Suggested Citation

  • Saibal Ghosh, 2009. "Industry Effects of Monetary Policy: Evidence from India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 44(1), pages 89-105, July.
    • Handle: RePEc:dse:indecr:v:44:y:2009:i:1:p:89-105
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    Cited by:

    1. Dobronravova, E., 2022. "Industry effects of monetary policy in Russia: Econometric analysis," Journal of the New Economic Association, New Economic Association, vol. 55(3), pages 45-60.
    2. Hillary Chijindu Ezeaku & Imo Godwin Ibe & Uche Boniface Ugwuanyi & N. J. Modebe & Emmanuel Kalu Agbaeze, 2018. "Monetary Policy Transmission and Industrial Sector Growth: Empirical Evidence From Nigeria," SAGE Open, , vol. 8(2), pages 21582440187, April.
    3. Adebayo Augustine Kutu & Harold Ngalawa, 2016. "Monetary Policy Shocks and Industrial Sector Performance in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 8(3), pages 26-40.
    4. Nandini Sengupta, 2014. "Sectoral Effects of Monetary Policy in India," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 127-154, June.
    5. Debi Prasad Bal & Sanhita Sucharita & Narayan Sethi & Seba Mohanty, 2025. "Is Public Debt Sustainable in Indian States? An Empirical Insight," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 8358-8373, June.
    6. Singh, Sunny Kumar & Rao, D. Tripati, 2014. "Sectoral effects of monetary policy shock: evidence from India," MPRA Paper 62069, University Library of Munich, Germany.
    7. Chee-Hong Law, 2023. "The Impacts of International Reserves on Monetary Independence in Emerging Countries: An Asymmetric Analysis," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(1), pages 53-71, January.
    8. Goto, Eiji & Bürgi, Constantin, 2021. "Sectoral Okun's law and cross-country cyclical differences," Economic Modelling, Elsevier, vol. 94(C), pages 91-103.
    9. Arash Ketabforoush Badri, 2022. "The Monetary Policy Shocks and the Price of Selected Oil Commodity Groups in Iran," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 7(3), pages 51-59, September.
    10. Wenzhe Li, 2018. "Does Targeted Monetary Policy Matter? A Perspective from China," Economic Affairs, Wiley Blackwell, vol. 38(1), pages 106-124, February.

    More about this item

    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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