Sectoral Effects of Monetary Policy in India

Nandini Sengupta
Additional contact information
Nandini Sengupta: Nandini Sengupta, Department of Economics, Kishinchand Chellaram College, University of Mumbai, Mumbai, India. E-mail: nandiniresearch@gmail.com

South Asian Journal of Macroeconomics and Public Finance, 2014, vol. 3, issue 1, 127-154

Abstract: Every economy comprises of different sectors with divergent characteristics. These different sectors respond heterogeneously to identical unanticipated macroeconomic stimuli. Using a Vector Autoregression model this study finds that the impact of a monetary policy shock at the sectoral level is heterogeneous with manufacturing being the most responsive. The sectors such as Manufacturing, Mining and Quarrying, Construction and Trade are the fastest to respond. The differential sectoral effects depend upon factors such as capital intensity, interest sensitivity, export-orientation, production planning strategies among others. The sectors also differ in terms of the most effective channel of monetary transmission. The interest rate channel has emerged as the most efficient channel of the monetary policy transmission in most of the sectors followed by the credit channel. Therefore, the heterogeneous sectoral responses indicate the need for a more sector-specific monetary policy. JEL Classification : E50, E52, E58, O53

Keywords: Transmission mechanism; VAR model; sectoral effect; interest rate channel; credit; exchange rate (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/2277978714525309 (text/html)

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:sae:smppub:v:3:y:2014:i:1:p:127-154

DOI: 10.1177/2277978714525309

Access Statistics for this article

More articles in South Asian Journal of Macroeconomics and Public Finance
Bibliographic data for series maintained by SAGE Publications ().