Monetary policy, uncertainty and COVID-19

Christian Pinshi

MPRA Paper from University Library of Munich, Germany

Abstract: The COVID-19 pandemic is influencing the management of monetary policy in its role as regulator of aggregate demand and guarantor of macroeconomic stability. We use a Bayesian VAR framework (BVAR) to provide an analysis of the COVID-19 uncertainty shock on the economy and monetary policy response. This analysis shows important conclusions. The uncertainty effect of COVID-19 hits unprecedented aggregate demand and the economy. In addition, it undermines monetary policy action to soften this fall in aggregate demand and curb inflation impacted by the exchange rate effect. We suggest a development of unconventional devices for a gradual recovery of the economy.

Keywords: Monetary policy; Uncertainty; COVID-19; Bayesian VAR (search for similar items in EconPapers)
JEL-codes: C32 E32 E51 E52 E58 (search for similar items in EconPapers)
Date: 2020-06-01, Revised 2020-05-27
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/100836/1/MPRA_paper_100836.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/104062/8/MPRA_paper_104062.pdf revised version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:100836

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter (winter@lmu.de).