Inflation Targeting and Monetary Policy Transmission Mechanisms in Emerging Market Economies
IMF Working Papers, October 1, 2011
Source details
- Canonical URL
- Inflation Targeting and Monetary Policy Transmission Mechanisms in Emerging Market Economies
Other formats
Bibliographic details
- Authors: Sanchita Mukherjee, Rina Bhattacharya
- Published: October 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463921293.001
Summary findings
- The paper empirically examines the operation of the traditional Keynesian interest rate channel of the monetary policy transmission mechanism in five potential inflation targeting economies in the MENA region and compares them with fourteen inflation targeting (IT) emerging market economies (EMEs) using panel data analysis.
- Private consumption and private investment in both groups of countries are sensitive to movements in real interest rates.
- The adoption of IT did not significantly alter the operation of the interest rate channel in IT EMEs.
- Interest rate elasticities of private consumption and private investment vary with the level of development of the domestic financial market.
- Capital account liberalization has opposite effects on private consumption and private investment in the two groups of countries.
Methodology and scope
- Empirical approach: panel data analysis.
- Country groups: five potential inflation targeting economies in the MENA region; fourteen inflation targeting (IT) emerging market economies (EMEs).
- Transmission mechanism focus: traditional Keynesian interest rate channel; interest rate elasticities for private consumption and private investment.
Key statistics and publication metadata
- Authors: Sanchita Mukherjee, Rina Bhattacharya
- Date: October 1, 2011
- Pages: 27
- Volume: 2011
- Issue: 229
- Series: Working Paper No. 2011/229
- DOI: https://doi.org/10.5089/9781463921293.001
- Stock No: WPIEA2011229
- ISBN: 9781463921293
- ISSN: 1018-5941
Subject areas and keywords
- Subject: Deposit rates, Emerging and frontier financial markets, Financial markets, Financial sector development, Financial services, National accounts, Private consumption, Private investment
- Keywords: Africa, consumption growth, Deposit rates, Emerging and frontier financial markets, financial market development, Financial sector development, Inflation targeting, Inflaton targeting, interest rate, interest rate channel, interest rate elasticity, interest rate sensitivity, investment, investment equation, Mena EMEs, monetary policy, private consumption, private investment, substitution effect, WP
IMF Working Paper. The views expressed are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.