Monetary Policy Effectiveness in Pakistan:An In-depth Analysis of Four Transmission Channels

Fida Hussain (), Fayyaz Hussain () and Kalim Hyder ()
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Fida Hussain: State Bank of Pakistan
Fayyaz Hussain: State Bank of Pakistan
Kalim Hyder: State Bank of Pakistan
Authors registered in the RePEc Author Service: Syed Kalim Hyder Bukhari

No 109, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: This paper assesses the evolution and relative strength of different channels of monetary policy transmission mechanism, including interest rate, credit, assets price and exchange rate channels. We have used Structural Vector Autoregressive (SVAR) method on monthly data from 1991 to 2019 for this purpose. The results show that monetary policy effectiveness has improved over time. And the credit channel is a relatively more effective in transmitting the changes in monetary policy stance to the economy as compared to other channels.

Keywords: Pakistan; monetary policy transmission channels; interest rate; exchange rate; credit; assets prices; SVAR; VECM; inflation. (search for similar items in EconPapers)
JEL-codes: E52 E58 G12 G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2022-04
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