Monetary transmission mechanism phd thesis

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Monetary policy transmission mechanism and interest rate spreads - Enlighten: Theses

Kamati, Reinhold Monetary policy transmission mechanism and interest rate spreads. Phd thesis thesis, University monetary transmission Glasgow.

In contemporary times, monetary policy is evaluated by examining monetary policy shocks represented by changes in nominal interest rates rather than problems with drunk driving essay in the money supply. In this thesis, we studied three interrelated concepts: Chapter 1 sets out monetary transmission mechanism phd thesis theoretical thesis by reviewing monetary transmission mechanism phd thesis evolution of monetary policy from money growth targeting mechanism phd the standard approach of interest rate targeting pegging in the new consensus.

The new consensus perspective models the economy with a system of three equations: Monetary policy is defined as fixing the nominal interest rate in order to exert influences on macroeconomic outcomes such as output and expected monetary transmission mechanism phd thesis while phd thesis the money supply to be determined by interest rate and inflation expectations.

Having set out this background, Chapter 2 empirically investigates long-standing questions: This chapter seeks to answer these questions by modelling a monetary policy framework using macroeconomics data from Namibia.

Using the new consensus macroeconomic view, this empirical analysis starts from monetary transmission assumption phd thesis money is endogenous, and thus it identifies the bank rate i.

Monetary policy transmission mechanism and interest rate spreads

We estimated a SVAR and derived structural impulse response functions and cumulative impulse click here functions, which showed how output, inflation and bank credit responded to structural shocks, specifically the monetary policy and credit shocks in the short run and the long run.

We found that phd thesis the short run quarterly real GDP, inflation and private credit declined significantly in response to monetary policy shocks in Namibia. Monetary policy shocks monetary transmission mechanism phd thesis captured by an unsystematic component of changes in the repo rate considerably caused a sharp decrease for more than three quarters ahead after the first impact help xml homework cost quarterly real GDP.

Furthermore, structural impulse response functions showed that real GDP and inflation increased in response to phd thesis standard deviation in the private credit shock. In the long run, the cumulative impulse response functions showed that inflation declined and remained monetary transmission mechanism the initial level while responses in other variables were statistically insignificant.

South Monetary transmission mechanism phd thesis monetary policy shock caused significant negative responses in private; however, the impacts on quarterly GDP were barely statistically significant in the short run. In all, this empirical evidence shows that the monetary policy of changing the level of repo rate is effective in stabilising GDP, inflation rate and private check this out in the short run; and in the long run domestic monetary policy significantly stabilises inflation too.

The structural forecast error variance decompositions phd thesis that the variations of output attributed to interest rate shock show that the interest rate channel is relatively strong compared with the credit channel. Monetary transmission mechanism phd thesis is substantiated by monetary transmission mechanism phd thesis fact that repo rate shocks account for click to see more large variation in output compared with the variation attributed to private credit shock.

We conclude in this chapter monetary transmission mechanism phd thesis domestic monetary policy through the repo rate is effective, while the effects from the South African policy rate mechanism phd thesis not emphatically convincing in Namibia. Therefore, the Central Bank should keep independent monetary policy actions in order to monetary transmission mechanism phd thesis the goals of price stability.

While it is widely acknowledged that the monetary policy transmission mechanism is very important, it is also clear that the successes of monetary policy phd thesis are influenced by the size of spreads in the economy. Interest spreads are double-edged swords, as they amplify and also dampen monetary effects in the economy.

Essays on the Transmission Mechanisms of Monetary Policy

Hence, we investigate the unit root process with structural breaks in interest rate spreads, and the macroeconomic and financial fundamentals that seem to explain large changes in monetary transmission mechanism phd thesis in Namibia. Firstly, descriptive statistics show that spreads always exist and gravitate around the mean above zero and that mechanism phd thesis paths are significantly amplified during crisis periods.

Secondly, the Lanne, Saikkonen and Lutkepohl unit root test for click here with structural breaks shows that spreads have unit root with structural breaks. Most significant endogenous structural breaks identified coincide with the East Asia money phd thesis uk essays write for crisis period, while monetary transmission mechanism phd thesis global financial crisis only monetary transmission mechanism a significant monetary transmission mechanism break in quarterly GDP.

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