An Analysis of the Transmission Mechanism of Monetary Policy in Ireland

Don Bredin and Gerard O’Reilly
Additional contact information
Gerard O’Reilly: Central Bank and Financial Services Authority of Ireland
Authors registered in the RePEc Author Service: Gerard Patrick O'Reilly

No 1/RT/01, Research Technical Papers from Central Bank of Ireland

Abstract: This paper examines the impact of monetary policy shocks on a number of key economic variables, including output, prices and the exchange rate. The paper draws on recent techniques used in the structural vector autoregression literature. Our results suggest that an exogenous temporary increase in the short-term interest rate leads to a decline in output and prices with the latter responding more sluggishly. In addition, a higher interest rate leads to an immediate appreciation of the domestic exchange rate and a subsequent depreciation of the currency. Hence, there is an absence of an exchange rate or forward bias puzzle, which are prevalent in other studies. Overall the response of macroeconomic variables to a change in the interest rate are very small in magnitude.

Pages: 28 pages
Date: 2001-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://centralbank.ie/docs/default-source/publica ... reilly).pdf?sfvrsn=4 (application/pdf)

Related works:
Journal Article: An analysis of the transmission mechanism of monetary policy in Ireland (2004)
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:cbi:wpaper:1/rt/01

Access Statistics for this paper

More papers in Research Technical Papers from Central Bank of Ireland Contact information at EDIRC.
Bibliographic data for series maintained by Fiona Farrelly ().