Monetary Transmission in Developing Countries : Evidence from India

Author/Editor:

Peter J Montiel ; Prachi Mishra ; Rajeswari Sengupta

Publication Date:

August 8, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We examine the strength of monetary transmission in India, using a conventional structural VAR methodology. We find that a tightening of monetary policy is associated with a significant increase in bank lending rates and conventional effects on the exchange rate, though pass-through to lending rates is only partial and exchange rate effects are weak. We could find no significant effects on real output or the inflation rate. Though the message for the effectiveness of monetary transmission in India is therefore mixed, our results for India are more favorable than is often found for other developing countries.

Series:

Working Paper No. 16/167

Subject:

English

Publication Date:

August 8, 2016

ISBN/ISSN:

9781475523966/1018-5941

Stock No:

WPIEA2016167

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

68

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