Effectiveness of Monetary Policy Transmission Mechanism in an Implicit Inflation Targeting Regime: The Case of Nigeria.

Monetary Aggregate ◽

Policy Transmission ◽

Development Indicator ◽

World Development Indicator ◽

Implementation Of Monetary Policy ◽

Abstract The study examines the effectiveness of the monetary policy transmission mechanism in Nigeria by estimating a sticky-price DSGE model using the Bayesian estimation approach. This study is important given the implicit inflation targeting framework employed in the implementation of monetary policy in the country. The study employs quarterly data from 2000:1 to 2019:4 to estimate the two main categories of monetary policy frameworks, monetary aggregate and implicit inflation targeting, respectively. Data are sourced from World Development Indicator (online version). Empirical results show that the monetary policy transmission channels are effective in transmitting policy impulses to the economy within this regime. However, the monetary aggregate framework that is made explicit dampens the achievement of this framework. The study, therefore, concludes that inflation targeting should be made explicit in the country in other to reap the benefits embedded in the framework.

Monetary Policy Transmission under Inflation Targeting in Mongolia

Research in Applied Economics ◽

10.5296/rae.v10i2.12950 ◽

2018 ◽

Vol 10 (2) ◽

pp. 1 ◽

Cited By ~ 2

Author(s):

Erdenechuluun Khishigjargal

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Interest Rate ◽

Inflation Targeting ◽

Transmission Mechanism ◽

Rate Transmission ◽

Policy Transmission ◽

Monetary Policy Transmission Mechanism ◽

The Interest Rate

This article aims to examine the monetary policy transmission mechanism under the inflation targeting in Mongolia for the period from June 2007 to August 2017 by applying a recursive vector-autoregressive model. Under the inflation targeting framework, the Bank of Mongolia has established the interest rate corridor since February 2013 for the purpose of improving the interest rate channel of the transmission mechanism. The study then contributes to the literature by assessing whether the interest rate corridor has really improved the policy rate transmission effects by comparing the effects between the pre-corridor period (from June 2007 to February 2013) and the post-corridor period (from March 2013 to August 2017). The main findings of this study are as follows. First, in the post-corridor period the effect of policy rate is clearly transmitted to the lending rate and inflation rate through the responses of interbank market rate, whereas the pre-corridor period does not represent any significant interest rate transmission effects. This outcomes implies that the interest rate corridor has contributed to enhancing monetary policy transmission mechanism. Second, the responses of exchange rate and industrial production to the policy rate shock are not significant even after the adoption of the interest rate corridor. This insignificance might come from the stick policy rate to stabilize the exchange rate, so-called a “fear of floating”.

Using Macroeconomic Models for Monetary Policy in Ukraine

Visnyk of the National Bank of Ukraine ◽

10.26531/vnbu2015.233.054 ◽

2015 ◽

pp. 54-64 ◽

Cited By ~ 5

Author(s):

Sergiy Nikolaychuk ◽

Yurii Sholomytskyi

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Inflation Targeting ◽

Transmission Mechanism ◽

Successful Implementation ◽

Macroeconomic Models ◽

Current State ◽

Policy Transmission ◽

An important precondition for successful implementation of inflation targeting is the ability of the central bank to forecast inflation given the fact that the inflation forecast has become an intermediate target. Certainly, this means there should be clear understanding of the monetary policy transmission mechanism functioning within the bank, because it is precisely through transmission channels that a central bank has to ensure convergence of its inflation forecast to the target. And it is almost impossible to pursue inflation targeting without a set of macroeconomic models that describes the monetary policy transmission mechanism and helps to analyse the current state of the economy as well as forecast (simulate) short- and medium-term macroeconomic scenarios. This article provides a review of the current state of macroeconomic modelling at central banks and describes the history of development and actual stance of the National Bank of Ukraine’s system of macroeconomic models. The existing system provides quite reliable support for the current monetary policy decision-making process, but it has to be improved by implementing a more sophisticated model (such as a dynamic stochastic general equilibrium model) and enhancing the set of econometric models for shortterm forecast purposes in the future.

The Monetary Policy Transmission Mechanism in a Term-Structure Model with Unspanned Macro Risks

SSRN Electronic Journal ◽

10.2139/ssrn.1968728 ◽

2011 ◽

Author(s):

Marcelo Ferman

Keyword(s):

Monetary Policy ◽

Term Structure ◽

Transmission Mechanism ◽

Structure Model ◽

Term Structure Model ◽

Policy Transmission ◽

Sukuk and monetary policy transmission in Indonesia: the role of asset price and exchange rate channels

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-09-2019-0177 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Suriani Suriani ◽

M. Shabri Abd. Majid ◽

Raja Masbar ◽

Nazaruddin A. Wahid ◽

Abdul Ghafar Ismail

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Interest Rates ◽

Asset Price ◽

Transmission Mechanism ◽

Content Type ◽

Policy Transmission ◽

Purpose The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy. Design/methodology/approach Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate. Findings This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel. Research limitations/implications The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets. Practical implications The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

Emerging Research on Monetary Policy, Banking, and Financial Markets - Advances in Finance, Accounting, and Economics ◽

Monetary Policy Transmission Mechanism in Romania Over the Period 2001 to 2012

10.4018/978-1-5225-9269-3.ch005 ◽

2019 ◽

pp. 131-145

Keyword(s):

Monetary Policy ◽

Interest Rate ◽

Empirical Evidence ◽

Transmission Mechanism ◽

Communist Country ◽

Policy Transmission ◽

Emerging Country ◽

Monetary Policy Transmission Mechanism ◽

The Interest Rate

This chapter aims to provide additional empirical evidence on monetary policy transmission mechanism in Romania over the period 2001 to 2012 based on a BVAR analysis with a KoKo Minnesota/Litterman prior. The importance of the central bank is rising in Romania considering its main attribution to control the interest rate in accordance with its objectives. The empirical evidence provides a significant contribution to literature taking into account the characteristics of the selected emerging country, i.e. Romania, a former communist country in Central and Eastern Europe.

Monetary Policy in Central Europe - Routledge International Studies in Money and Banking ◽

Monetary policy transmission mechanism in Central Europe

10.4324/9780203964231.ch3 ◽

2007 ◽

pp. 79-87

Keyword(s):

Monetary Policy ◽

Central Europe ◽

Transmission Mechanism ◽

Policy Transmission ◽

Does bank capital affect the monetary policy transmission mechanism? A case study of Emerging Market Economies (EMEs)

International Journal of Financial Engineering ◽

10.1142/s2424786319500191 ◽

2019 ◽

Vol 06 (02) ◽

pp. 1950019

Author(s):

Zia Abbas ◽

Syed Faizan Iftikhar ◽

Shaista Alam

Keyword(s):

Monetary Policy ◽

Emerging Market ◽

Generalized Method Of Moments ◽

Transmission Mechanism ◽

Bank Capital ◽

Policy Transmission ◽

Loan Supply ◽

Monetary Policy Transmission Mechanism ◽

The Impact

The objective of this study is to investigate the impact of bank capital on monetary policy transmission mechanism during the period from 2010 to 2016 for 20 Emerging Market Economics (EMEs) by using the two-step system generalized method of moments (GMM). The coefficient of excess capital in low-asset countries is found to be negative which reveals the importance of excess capital for the effectiveness of monetary transmission. However, the study could not find the significance of excess capital for high-asset countries as they may afford the risky way to generate their income by increasing the loan supply.