{
  "title": "Monetary Policy Transmission in Emerging Markets: Proverbial Concerns, Novel Evidence",
  "publication": "IMF Working Papers, May 3, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2024/05/03/monetary-policy-transmission-in-emerging-markets-proverbial-concerns-novel-evidence-546642",
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  "summary": "Doubts persist about the effectiveness of monetary transmission in emerging markets, but the empirical evidence is scarce due to challenges in identifying monetary policy shocks. In this paper, we construct new monetary policy shocks using novel analysts’ forecasts of policy rate decisions.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Authors: Ariadne Checo, Francesco Grigoli, Damiano Sandri\n- Date: May 3, 2024\n- Core finding: Monetary transmission in emerging markets operates similarly to advanced economies.\n- Key observed effects of monetary tightening:\n  - Persistent increase in bond yields.\n  - Contraction in real activity.\n  - Delayed reduction in inflation.\n- Additional finding: Monetary policy impacts leveraged firms more strongly."
    },
    {
      "heading": "Identification and Methodology",
      "content": "- Novel shock construction: New monetary policy shocks are constructed using analysts’ forecasts of policy rate decisions.\n- Identification crucial feature: Analysts can update forecasts up to the policy meeting, allowing them to incorporate any relevant data release."
    },
    {
      "heading": "Main Results",
      "content": "- Transmission channels documented:\n  - Financial market response: persistent increase in bond yields following tightening.\n  - Real economy response: contraction in real activity following tightening.\n  - Inflation response: reduction in inflation that occurs with delay after tightening.\n- Comparative conclusion: Evidence indicates transmission in emerging markets is similar to that in advanced economies."
    },
    {
      "heading": "Heterogeneity and Firm-Level Effects",
      "content": "- Leveraged firms: Monetary policy has stronger impacts on leveraged firms relative to less-leveraged firms.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/05/03/monetary-policy-transmission-in-emerging-markets-proverbial-concerns-novel-evidence-546642"
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    "Authors: Ariadne Checo, Francesco Grigoli, Damiano Sandri",
    "Published: May 3, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400268564.001",
    "Authors: Ariadne Checo, Francesco Grigoli, Damiano Sandri",
    "Date: May 3, 2024",
    "Core finding: Monetary transmission in emerging markets operates similarly to advanced economies.",
    "Key observed effects of monetary tightening:",
    "Additional finding: Monetary policy impacts leveraged firms more strongly.",
    "Novel shock construction: New monetary policy shocks are constructed using analysts’ forecasts of policy rate decisions.",
    "Identification crucial feature: Analysts can update forecasts up to the policy meeting, allowing them to incorporate any relevant data release.",
    "Transmission channels documented:",
    "Comparative conclusion: Evidence indicates transmission in emerging markets is similar to that in advanced economies.",
    "Leveraged firms: Monetary policy has stronger impacts on leveraged firms relative to less-leveraged firms.",
    "**Working Paper**"
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