Liquidity Management and Monetary Policy: From Corridor Play to Marksmanship

Patra, Michael Debabrata; Kapur, Muneesh; Kavediya, Rajesh; Lokare, S. M.

doi:10.1007/978-81-322-2840-0_9

Cited by 4 publications

(6 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…As for the objectives of monetary policy, the RBI stated them to be price stability, growth, and financial stability.19 SeePatra et al (2016), Chapter X in this volume for details.…”

mentioning

confidence: 99%

Capital Flows and Central Banking: The Indian Experience

Gupta

2016

Monetary Policy in India

View full text Add to dashboard Cite

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

show abstract

“…As for the objectives of monetary policy, the RBI stated them to be price stability, growth, and financial stability.19 SeePatra et al (2016), Chapter X in this volume for details.…”

mentioning

confidence: 99%

Capital Flows and Central Banking: The Indian Experience

Gupta

2016

Monetary Policy in India

View full text Add to dashboard Cite

show abstract

“…Higher volatility in WACR can create uncertainty about longer tenure rates. The rolling period standard deviations of the call rate for 7–90 days declined to 0.2% in 2015–2016 from 4.6% in 2006–2007 (Patra et al , 2016), implying better monetary policy efficiency.…”

Section: Review Of Literaturementioning

confidence: 97%

“…Authors have applied time-series tools to study all three parts of monetary transmission after the LAF became functional and operating systems changed. Patra et al (2016) in order to study the first leg relationship between the policy rate (repo) and weighted average call money rate (operating target) divided the period from April 2008 to September 2015 into three segments based on the major changes in the monetary policy framework. Their autoregressive distributed lag based approach found the call rate to be closely aligned to the policy rate across the full sample as well as across regimes.…”

Section: Review Of Literaturementioning

confidence: 99%

Liquidity management and monetary transmission: empirical analysis for India

Charmal

Goyal

2021

JES

View full text Add to dashboard Cite

PurposeA change in monetary operating procedures provides a natural experiment which is used to evaluate, first, whether Indian monetary policy transmission is better when durable liquidity is in surplus or when it is in deficit; second whether it is better with interest rates as the policy instrument or quantity of money or a mixture of the two.Design/methodology/approachThis study first shows that the period of analysis can be divided into two separate regimes one of liquidity surplus (2002–2010) and the other of deficit (2011–2019).This study then estimates separate structural vector auto-regressions (SVARs) for the financial and real sector, with relevant exogenous foreign, policy and other variables for each of the periods as well as SVARs for the whole period with alternative operating instruments.FindingsMonetary transmission from the repo rate was better during the period the liquidity adjustment facility (LAF) was in surplus with the central bank in absorption mode denoting excess durable liquidity. Pass through was faster and the repo rate had a greater influence on other variables. The impact of the rate on output gap exceeds that on inflation. The weighted average call money rate was found to outperform others as the operating target. Monetary policy has evolved so that policy rates are more effective in transmission compared to money supply, but best results are when durable liquidity is also in surplus.Originality/valueThe results contribute to ongoing debates on the Indian monetary policy framework and give useful inputs for policy in emerging markets where research is scarce. They suggest keeping the LAF in deficit mode over 2011–19 was not optimal.

show abstract

“…Patra et al, (2016) 13 analyse the pass through from policy rate to the operating target i.e., the weighted average call money rate across different regimes of the LAF. It is seen that the long run coefficient on the effective policy rate is close to unity.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The reason may be that in some cases the price instrument and quantity instrument have been used in different directions. Secondly expectations of financial market agents may be slow in adjusting when a combination of policies is used especially during a period when global financial spillovers have an effect on the domestic financial markets (Patra et al, 2016) 13 .…”

Section: Model 2 -Overall Stance Of Monetary Policy As the Policy Var...mentioning

confidence: 99%

Monetary Policy Transmission in Financial Markets: The Case of India

Chakravarty

2021

JBT

View full text Add to dashboard Cite

<p>The paper looks into the monetary policy transmission across different segments of the financial market in India from May 2011 to March 2018. It studies the effect of two instruments ie, policy rate and a composite index ( score) comprising of quantity instruments and policy rates on the money market, govt. securities market, foreign exchange market and the stock market using VAR analysis. The results show that monetary transmission is fairly quick in the money market and other interest rates of short maturity compared to interest rates of longer maturities. The impact on interest rates is an appreciation for the policy rate but a depreciation followed by an appreciation for the composite index. Lastly the effect of policy rate and composite index on the sensex is negative.</p>

show abstract

Liquidity Management and Monetary Policy: From Corridor Play to Marksmanship

Cited by 4 publications

References 25 publications

Capital Flows and Central Banking: The Indian Experience

Capital Flows and Central Banking: The Indian Experience

Liquidity management and monetary transmission: empirical analysis for India

Monetary Policy Transmission in Financial Markets: The Case of India

Contact Info

Product

Resources

About