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Monetary transmission mechanism in Poland.The strenght and delays

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Abstract

Monetary transmission mechanism is in the core of central banking. Its understanding however seems to be especially important within direct inflation targeting strategy. In particular, it facilitates the adequate setting of headline interest rates, consistent with declared objectives of the monetary policy. This paper looks into the strength of the monetary transmission mechanism in Poland as well as the delays in this process. It does so by using a new version of the small structural model of monetary transmission mechanism in Poland. There are three major differences between the new version of the model and the previous one, discussed in detail in Lyziak (2001). Firstly, in the version of the model presented in this paper, the interest rate channel and the banklending channel are modelled jointly. Secondly, due to the use of more adequate measures of the real exchange rate and a change of the sample period, both direct and indirect (demand) effects of the exchange rate channel are captured. Thirdly, in the new version of the model price behaviour of selected items of the consumer basket - i.e. foodstuffs, oil and remaining items - is modelled separately. Based on the model simulations, the paper confirms that the effectiveness of the monetary transmission mechanism in Poland has increased. It is reflected in a relatively stronger impact of interest rate impulses on inflation relative to the conclusions from the previous version of the model.

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  • Tomasz Lyziak, 2002. "Monetary transmission mechanism in Poland.The strenght and delays," NBP Working Papers 26, Narodowy Bank Polski, Economic Research Department.
  • Handle: RePEc:nbp:nbpmis:26
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    Cited by:

    1. Gulbin Sahinbeyoglu, 2001. "Monetary Transmission Mechanism : A View From A High Inflationary Environment," Discussion Papers 0101, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    2. Sanvi Avouyi-Dovi & Rafał Kierzenkowski & Catherine Lubochinsky, 2006. "Cycles réel et du crédit : convergence ou divergence ?. Une comparaison Pologne, Hongrie, République tchèque et zone euro," Revue économique, Presses de Sciences-Po, vol. 57(4), pages 851-879.
    3. Wojciech W Charemza & Svetlana Makarova, 2006. "Ex ante Dynamics of Real Effects of Monetary Policy: Theory and Evidence for Poland and Russia, 2001–2003," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(3), pages 458-479, September.
    4. Golinelli, Roberto & Rovelli, Riccardo, 2005. "Monetary policy transmission, interest rate rules and inflation targeting in three transition countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 183-201, January.
    5. Tomasz Lyziak, 2014. "Inflation expectations in Poland, 2001–2013. Measurement and macroeconomic testing," NBP Working Papers 178, Narodowy Bank Polski, Economic Research Department.
    6. Adrián Armas & Francisco Grippa, 2005. "Targeting Inflation in a Dollarized Economy: The Peruvian Experience," Research Department Publications 4423, Inter-American Development Bank, Research Department.
    7. Avouyi-Dovi, S. & Kierzenkowski, R. & Lubochinsky, C., 2006. "Are Business and Credit Cycles Converging or Diverging? A comparison of Poland, Hungary, the Czech Republic and the Euro Area," Working papers 144, Banque de France.
    8. Adrián Armas & Francisco Grippa, 2005. "Fijación de metas inflacionarias en una economía dolarizada: la experiencia de Perú," Research Department Publications 4424, Inter-American Development Bank, Research Department.
    9. Bohdan Klos & Ryszard Kokoszczynski & Tomasz Lyziak & Jan Przystupa & Ewa Wrobel, 2005. "Structural Econometric Models in Forecasting Inflation at the National Bank of Poland," NBP Working Papers 31, Narodowy Bank Polski, Economic Research Department.
    10. Adrián Armas & Francisco Grippa, 2008. "Metas de inflación en una economía dolarizada: La experiencia del Perú," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 10(1), pages 7-44, December.
    11. Kierzenkowski, Rafal, 2005. "The multi-regime bank lending channel and the effectiveness of the Polish monetary policy transmission during transition," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 1-24, March.
    12. Christophe Hurlin & Rafal Kierzenkowski, 2002. "A Theoretical and Empirical Assessment of the Bank Lending Channel and Loan Market Disequilibrium in Poland," NBP Working Papers 22, Narodowy Bank Polski, Economic Research Department.
    13. Stepanyan Ara & Tevosyan Anahit, 2008. "A small open economy model with remittances: Evidence from Armenian economy," EERC Working Paper Series 08/06e, EERC Research Network, Russia and CIS.

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