Publication:
Resolving Puzzles of Monetary Policy Transmission in Emerging Markets

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dc.contributor.authorHa, Jongrim
dc.contributor.authorKim, Dohan
dc.contributor.authorKose, M. Ayhan
dc.contributor.authorPrasad, Eswar S.
dc.date.accessioned2024-11-19T18:51:20Z
dc.date.available2024-11-19T18:51:20Z
dc.date.issued2024-11-19
dc.description.abstractConventional empirical models of monetary policy transmission in emerging market economies produce puzzling results: monetary tightening often leads to an increase in prices (the price puzzle) and depreciation of the currency (the foreign exchange puzzle). This paper shows that incorporating forward-looking expectations into standard open economy structural vector autoregressive models resolves these puzzles. Specifically, the models are augmented with novel survey-based measures of expectations based on consumer, business, and professional forecasts. The findings show that the rise in prices following monetary tightening is related to currency depreciation, so eliminating the foreign exchange puzzle helps solve the price puzzle.en
dc.identifierhttp://documents.worldbank.org/curated/en/099317311142419883/IDU1d7b333aa1eaa814b0a196ff194e85018982d
dc.identifier.doi10.1596/1813-9450-10974
dc.identifier.urihttps://hdl.handle.net/10986/42437
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 10974
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectMONETARY POLICY
dc.subjectEMERGING MARKET ECONOMIES
dc.subjectPRICE PUZZLE
dc.subjectFOREIGN EXCHANE PUZZLE
dc.titleResolving Puzzles of Monetary Policy Transmission in Emerging Marketsen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleResolving Puzzles of Monetary Policy Transmission in Emerging Markets
okr.date.disclosure2024-11-19
okr.date.lastmodified2024-11-14T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099317311142419883/IDU1d7b333aa1eaa814b0a196ff194e85018982d
okr.guid099317311142419883
okr.identifier.docmidIDU-d7b333aa-eaa8-4b0a-96ff-94e85018982d
okr.identifier.doi10.1596/1813-9450-10974
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10974
okr.identifier.externaldocumentum34422312
okr.identifier.internaldocumentum34422312
okr.identifier.reportWPS10974
okr.import.id5812
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099317311142419883/pdf/IDU1d7b333aa1eaa814b0a196ff194e85018982d.pdfen
okr.region.geographicalWorld
okr.topicMacroeconomics and Economic Growth::Inflation
okr.topicMacroeconomics and Economic Growth::Markets and Market Access
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.unitProspects Group (DECPG)
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relation.isAuthorOfPublication.latestForDiscoveryac9fefe8-9d4d-555d-bb68-f056fd7a3790
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