The Monetary Transmission in Dollarized and Non-Dollarized Economies: The Cases of Chile, New Zealand, Peru and Uruguay
IMF Working Papers, April 1, 2011
Source details
- Canonical URL
- The Monetary Transmission in Dollarized and Non-Dollarized Economies: The Cases of Chile, New Zealand, Peru and Uruguay
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Bibliographic details
- Authors: Santiago Acosta Ormaechea, David O Coble Fernandez
- Published: April 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455234097.001
Authors and publication
- By Santiago Acosta Ormaechea, David O Coble Fernandez
- April 1, 2011
- IMF Working Papers
Summary and comparative focus
- The paper conducts a comparative study of the monetary policy transmission in two economies that run a well-established IT regime, Chile and New Zealand, vis-à-vis two economies operating under relatively newer IT regimes, and which are exposed to a significant degree of dollarization, Peru and Uruguay.
- The analysis emphasizes differences in the relative importance of transmission channels (interest rate channel versus exchange rate channel) across the four countries.
Key findings
- The traditional interest rate channel is effective in Chile and New Zealand.
- For Peru and Uruguay, the exchange rate channel is more relevant in the transmission of monetary policy.
- The greater role of the exchange rate channel in Peru and Uruguay follows from:
- The limited impact of the policy rate in curbing inflationary pressures in these two countries.
- The presence of a relatively large and persistent exchange rate pass through in these economies.
- The on-going de-dollarization process of Peru and Uruguay has somewhat strengthened their monetary transmission through the interest rate channel.
Subjects and keywords
- Subject: Central bank policy rate, Deposit rates, Exchange rates, Inflation, Money markets
- Keywords: Peru, rate, Uruguay, WP
Content in this bundle
- Microsoft Word - M policy, 5.23.2011.docx