How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence

Author/Editor: Prachi Mishra ; Peter Montiel
Publication Date: June 01, 2012
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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: This paper surveys the evidence on the effectiveness of monetary transmission in low-income countries. It is hard to come away from this review with much confidence in the strength of monetary transmission in such countries. We distinguish between the "facts on the ground" and "methodological deficiencies" interpretations of the absence of evidence for strong monetary transmission. We suspect that "facts on the ground" are an important part of the story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.
Series: Working Paper No. 12/143
Subject(s): Banks | Developing countries | Eastern Europe | Latin America | Low-income developing countries | Middle East and Central Asia | Monetary policy | Monetary transmission mechanism | Transition economies

Author's Keyword(s): Monetary policy | exchange rate | interest rate | banks | institutions | developing countries
Publication Date: June 01, 2012
ISBN/ISSN: 9781475504064/1018-5941 Format: Paper
Stock No: WPIEA2012143 Pages: 48
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