Commodity Prices, Inflationary Pressures, and Monetary Policy: Evidence from BRICS Economies

Sushanta Mallick () and Ricardo Sousa

Open Economies Review, 2013, vol. 24, issue 4, 677-694

Abstract: We assess the transmission of monetary policy and the impact of fluctuations in commodity prices on the real economy for the five biggest and fastest growing emerging market economies: Brazil, Russia, India, China and South Africa (BRICS). Using modern econometric techniques, we show that a monetary policy contraction has a negative effect on output, suggesting that it can lean against unexpected macroeconomic shocks even when the financial markets are not well-developed in this group of countries. We also uncover the importance of commodity price shocks, which lead to a rise in inflation and demand an aggressive behaviour from central banks towards inflation stabilisation. Copyright Springer Science+Business Media New York 2013

Keywords: Monetary policy; Commodity prices; Emerging markets; Bayesian VAR; Sign Restrictions VAR; Panel VAR; E37; E52 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (56)

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DOI: 10.1007/s11079-012-9261-5

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