How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence

Prachi Mishra and Peter Montiel

No 2012/143, IMF Working Papers from International Monetary Fund

Abstract: This paper surveys the evidence on the effectiveness of monetary transmission in low-income countries. It is hard to come away from this review with much confidence in the strength of monetary transmission in such countries. We distinguish between the "facts on the ground" and "methodological deficiencies" interpretations of the absence of evidence for strong monetary transmission. We suspect that "facts on the ground" are an important part of the story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.

Keywords: WP; price level; aggregate demand; bond market; central bank; monetary aggregate; monetary policy; exchange rate; interest rate; banks; institutions; developing countries; bank lending channel; regime indicator; nominal exchange rate; lending rate; Bank credit; Securities markets; Stock markets; Exchange rate arrangements; Exchange rates; Sub-Saharan Africa; Central and Eastern Europe; Central Asia; Middle East; North Africa (search for similar items in EconPapers)
Pages: 48
Date: 2012-06-01
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Citations: View citations in EconPapers (62)

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Journal Article: How effective is monetary transmission in low-income countries? A survey of the empirical evidence (2013)
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