Output Composition of Monetary Policy Transmission in Pakistan

Asmma Kamal ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper employs an unrestricted vector autoregressive (VAR) model, identified using a recursive Cholesky decomposition, to examine the output composition of the monetary policy transmission mechanism in Pakistan. The results indicate that a contractionary monetary policy shock leads to a relatively larger decline in private consumption compared to private investment with a significant lag. Furthermore, preliminary analysis suggests that the consumption channel plays a more important role than investment channel in contributing to the output reactions resulting from policy rate (interbank rate) shocks during the period 1995Q3 2010Q2 analysed in this study.

Keywords: Monetary policy; output composition; consumption; investment (search for similar items in EconPapers)
JEL-codes: E5 E52 (search for similar items in EconPapers)
Date: 2016-10-20, Revised 2017-04-20
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:78655

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