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Evidence on Monetary Policy Transmission During Tranquil and Turbulent Periods

Author

Listed:
  • Chioma Peace Nwosu

    (Central Bank of Nigeria)

  • Afees A. Salisu

    (Centre for Econometric & Allied Research, University of Ibadan)

  • Margaret Johnson Hilili

    (Central Bank of Nigeria)

  • Izuchukwu Ifeanyi Okafor

    (Central Bank of Nigeria)

  • Izuchukwu Oji-Okoro

    (Central Bank of Nigeria)

  • Idis Adediran

    (Centre for Econometric & Allied Research, University of Ibadan)

Abstract

This paper evaluates monetary policy transmission in both tranquil and turbulent periods for Mexico, Indonesia, Nigeria, and Turkey. Using a structural vector autoregressive model, we find that the effect of structural shocks from supply, demand, and financial sources tend to fizzle out faster for Nigeria and Mexico compared to Indonesia and Turkey. Another important finding is that while monetary authorities in Indonesia and Turkey are more responsive to inflation those in Mexico and Nigeria are more influenced by the exchange rate. We also observe differences in the conduct of monetary policy between the tranquil and turbulent periods.

Suggested Citation

  • Chioma Peace Nwosu & Afees A. Salisu & Margaret Johnson Hilili & Izuchukwu Ifeanyi Okafor & Izuchukwu Oji-Okoro & Idis Adediran, 2019. "Evidence on Monetary Policy Transmission During Tranquil and Turbulent Periods," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 22(3), pages 311-350, October.
    • Handle: RePEc:idn:journl:v:22:y:2019:i:3d:p:311-350
    DOI: https://doi.org/10.21098/bemp.v22i3.1111
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    References listed on IDEAS

    as
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    2. repec:idn:journl:v:13:y:2011:i:4h:p:1-34 is not listed on IDEAS
    3. Mishkin, Frederic S., 2017. "Rethinking monetary policy after the crisis," Journal of International Money and Finance, Elsevier, vol. 73(PB), pages 252-274.
    4. John B. Taylor, 1999. "A Historical Analysis of Monetary Policy Rules," NBER Chapters, in: Monetary Policy Rules, pages 319-348, National Bureau of Economic Research, Inc.
    5. Nils Jannsen & Galina Potjagailo & Maik H. Wolters, 2019. "Monetary Policy during Financial Crises: Is the Transmission Mechanism Impaired?," International Journal of Central Banking, International Journal of Central Banking, vol. 15(4), pages 81-126, October.
    6. Chen, Chuanglian & Yao, Shujie & Ou, Jinghua, 2017. "Exchange rate dynamics in a Taylor rule framework," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 158-173.
    7. Narayan, Paresh Kumar & Liu, Ruipeng, 2015. "A unit root model for trending time-series energy variables," Energy Economics, Elsevier, vol. 50(C), pages 391-402.
    8. Borrallo Egea, Fructuoso & Hierro, Luis Ángel, 2019. "Transmission of monetary policy in the US and EU in times of expansion and crisis," Journal of Policy Modeling, Elsevier, vol. 41(4), pages 763-783.
    9. Mahir Binici & Hakan Kara & Pınar Özlü, 2019. "Monetary transmission with multiple policy rates: evidence from Turkey," Applied Economics, Taylor & Francis Journals, vol. 51(17), pages 1869-1893, April.
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    11. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    12. repec:idn:journl:v:13:y:2011:i:4:p:1-36 is not listed on IDEAS
    13. Yagihashi, Takeshi, 2011. "Estimating Taylor rules in a credit channel environment," The North American Journal of Economics and Finance, Elsevier, vol. 22(3), pages 344-364.
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    Cited by:

    1. Saba, Danladi Ndayezhin, 2024. "International Monetary Policy Spillovers to Small Open Economies: Evidence from GVAR," MPRA Paper 126271, University Library of Munich, Germany, revised 25 Sep 2025.

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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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