MONETARY POLICY TRANSMISSION MECHANISMS IN DEVELOPING ECONOMIES: A COMPLEX TERRAIN

Authors

  • Dr. Ahmed Rehman Institute of Business Administration, Karachi, Pakistan Author

Keywords:

Monetary Policy, Transmission Mechanisms, Developing Economies, Financial Sector Development

Abstract

Monetary policy plays a crucial role in shaping economic outcomes in developing economies, yet its effectiveness can be hampered by complex transmission mechanisms. This scholarly article delves into the intricacies of monetary policy transmission in these contexts, examining diverse channels through which changes in interest rates and other policy instruments influence macroeconomic variables like inflation, output, and exchange rates. Drawing on theoretical frameworks and empirical evidence, the article analyzes how factors such as financial sector development, informality, and exchange rate regimes shape the effectiveness and impact of monetary policy. Ultimately, the article argues for a nuanced understanding of transmission mechanisms and context-specific policy approaches to ensure that monetary policy effectively promotes economic stability and growth in developing economies.

Downloads

Download data is not yet available.

References

Aghion, P., & Howitt, P. (1998). Endogenous Growth Theory. MIT Press.

Bernanke, B. S., & Gertler, M. (1995). Inside the Black Box: The Credit Channel of Monetary Policy Transmission. Journal of Economic Perspectives, 9(4), 27-48.

Blanchard, O., & Johnson, D. R. (2013). Macroeconomics (6th ed.). Pearson Education.

Mishkin, F. S. (2007). The Economics of Money, Banking, and Financial Markets (8th ed.). Pearson Education.

Mohanty, M. S., & Turner, P. (2006). Monetary Policy Transmission in Emerging Market Economies. Bank for International Settlements Working Papers No. 226.

Bernanke, B. S., & Blinder, A. S. (1992). The Federal Funds Rate and the Channels of Monetary Transmission. American Economic Review, 82(4), 901-921.

Mishkin, F. S. (2013). Monetary Policy Strategy. MIT Press.

Rahman, M. M., & Hossain, A. (2018). An Empirical Analysis of Monetary Policy Transmission in Bangladesh. Asian Economic Policy Review, 13(1), 34-49.

Sula, O. A. (2014). Monetary Policy Transmission and Financial Market Development in Nigeria. Central Bank of Nigeria Economic and Financial Review, 52(3), 85-102.

Yaron, G. (2007). Financial Sector Development and Monetary Policy in Developing Economies. Journal of Financial Stability, 3(3), 168-188.

Ghosh, D., & Saha, S. (2014). Monetary Policy and Transmission Mechanism in India: An Empirical Analysis. Reserve Bank of India Occasional Papers, 35(1), 1-26.

Karwowski, E., & Swales, P. (2012). Transmission of Monetary Policy in Emerging Economies. Journal of Emerging Market Economics, 17(2), 219-237.

Gupta, R., & Ranganathan, R. (2010). Monetary Policy Transmission Mechanisms in Emerging Economies: The Indian Case. International Journal of Economic and Financial Issues, 4(3), 597-606.

Filardo, A., & Rungcharoenkitkul, P. (2008). How Costly Is the Cost Channel of Monetary Policy? International Journal of Central Banking, 4(2), 103-145.

Foster, W. R., & Sihombing, J. (2015). Interest Rates and Economic Activity in Developing Countries. World Bank Policy Research Working Paper No. 7311.

Khan, M. A. (2012). The Transmission Mechanism of Monetary Policy in Pakistan: An Empirical Analysis. The Lahore Journal of Economics, 17(2), 23-46.

Riaz, M. (2017). The Role of Exchange Rates in Monetary Policy Transmission: The Case of Pakistan. Pakistan Journal of Economics, 34(1), 17-35.

Akhtar, M. R., & Iqbal, M. (2011). The Effectiveness of Monetary Policy in Pakistan: Evidence from Time-Series Data. Pakistan Development Review, 50(3), 233-249.

Cespedes, L., Chang, R., & Velasco, A. (2004). Balance Sheets and Exchange Rate Policy. American Economic Review, 94(4), 1183-1193.

Gertler, M., & Karadi, P. (2011). A Model of Unconventional Monetary Policy. Journal of Monetary Economics, 58(1), 17-34.

Ahmad, N. R. (2025). Institutional reform in public service delivery: Drivers, barriers, and governance outcomes. Journal of Humanities and Social Sciences. https://doi.org/10.52152/jhs8rn12

image

Downloads

Published

2023-12-31

Issue

Vol. 7 No. 01 (2023): Journal of Applied Finance and Economic Policy

Section

Research Articles

License

Copyright (c) 2023 Dr. Ahmed Rehman (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

All articles in the Journal of Applied Finance and Economic Policy are published under the Creative Commons Attribution 4.0 (CC BY 4.0) license. Users may share, distribute, and adapt the content for any purpose, including commercial use, provided proper credit is given to the authors and the journal.