Procyclical Monetary Policy and Governance

Ali Choudhary, Muhammad Hanif, Sajawal Khan () and Muhammad Rehman ()
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Muhammad Rehman: State Bank of Pakistan

No 37, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: Weak governance adversely affects firm’s net worth and consequently the value of its collateral. This negative impact on the collateral reduces the external credit available for importing inputs constraining potential output. As a result, a stronger procyclical monetary policy stance is adopted for protecting the exchange rate and hence arresting the degradation in the collateral constraint.

Keywords: Collateral constraints; governance; monetary policy (search for similar items in EconPapers)
JEL-codes: E5 F4 O1 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2010-11
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Procyclical Monetary Policy and Governance (2012)
Working Paper: Procyclical Monetary Policy and Governance (2010)
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