IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-15-00548.html
   My bibliography  Save this article

Relative Importance of Monetary Transmission Mechanism in Sri Lanka: An Empirical Investigation

Author

Listed:
  • Sooriyakumar Krishnapillai

    () (University of Jaffna)

  • Vairavipillai pasupathy Sivanathan

    () (University of Jaffna)

  • Anushiya Sireeranhan

    () (University of Jaffna)

Abstract

This paper studies various monetary transmission channels in Sri Lanka to identify the more effective transmission mechanism and the policy rate that signals changes in monetary policy more effectively. The standard recursive Structural Vector Autoregression (SVAR) models are used to analyze monetary transmission mechanism. Impulse response of output to a one standard deviation positive shock in reserve money indicates that credit channel is more effective transmission channel than interest rate and exchange rate channel in Sri Lanka and repo rate is the policy rate that signals the changes in monetary policy more effectively.

Suggested Citation

  • Sooriyakumar Krishnapillai & Vairavipillai pasupathy Sivanathan & Anushiya Sireeranhan, 2016. "Relative Importance of Monetary Transmission Mechanism in Sri Lanka: An Empirical Investigation," Economics Bulletin, AccessEcon, vol. 36(1), pages 560-568.
  • Handle: RePEc:ebl:ecbull:eb-15-00548
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I1-P55.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Rafiq, M.S. & Mallick, S.K., 2008. "The effect of monetary policy on output in EMU3: A sign restriction approach," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1756-1791, December.
    2. 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.
    3. Jonathan C Dunn & Matt Davies & Yongzheng Yang & Yiqun Wu & Shengzu Wang, 2011. "Monetary Policy Transmission Mechanisms in Pacific Island Countries," IMF Working Papers 11/96, International Monetary Fund.
    4. Frederic S. Mishkin, 1996. "The Channels of Monetary Transmission: Lessons for Monetary Policy," NBER Working Papers 5464, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Monetary transmission mechanism; Structural Vector Auto Regression; Impulse response;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-15-00548. 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: (John P. Conley). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.