Monetary Policy Implementation: Results From a Survey

Buzeneca, Inese; Maino, Rodolfo

doi:10.5089/9781451865714.001

Cited by 15 publications

(16 citation statements)

References 3 publications

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“…A simple variance decomposition exercise suggests that 95 percent of the variation in discount rates in our sample is within countries (as opposed to across countries). Buzeneca and Maino (2007) report that, while no advanced countries in the IMF's Information Systems for Instruments of Monetary Policy (ISIMP) database used discount credit as a monetary policy instrument, 69 percent of lowincome countries did so. imperfectly competitive banks may not pass on changes in policy rates.…”

Section: Competition In the Banking Sectormentioning

confidence: 97%

Monetary Transmission in Low-Income Countries: Effectiveness and Policy Implications

Mishra¹,

Montiel²,

Spilimbergo³

2012

IMF Econ Rev

114

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Section: Competition In the Banking Sectormentioning

confidence: 97%

Monetary Transmission in Low-Income Countries: Effectiveness and Policy Implications

Mishra¹,

Montiel²,

Spilimbergo³

2012

IMF Econ Rev

114

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Section: Maturity Of Government Obligationsmentioning

confidence: 99%

How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence

Mishra

Montiel

2012

IMF Working Papers

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This paper reviews the monetary transmission mechanism in low income countries (LICs). We use monetary transmission in advanced and emerging markets as a benchmark to identify aspects of the transmission mechanism that may operate differently in LICs. In particular, we focus on the effects of financial market structure on monetary transmission. The weak institutional framework prevalent in LICs drastically reduces the role of securities markets and increases the cost of bank lending to private firms. Coupled with imperfect competition in the banking sector, this means that banks with chronically high excess reserves invest in domestic public bonds or (when possible) in foreign bonds. With the financial system not intermediating funds properly, the traditional monetary transmission channels (interest rate, bank lending, and asset price) are impaired. The exchange rate channel, on the other hand, tends to be undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature.

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“…Both standing facilities and reserve requirements are used in all developing countries studied, with the Lombard facility being the most common type of standing facility. Buzeneca and Maino (2007).…”

Section: Box 11: Monetary Policy Instruments: Evidence From Other Dementioning

confidence: 99%

“…In addition to changes to the operational framework, the PBC started relying on new instruments. Laurens (2005) and Buzeneca and Maino (2007) divide monetary policy operations into three basic types. (1) Direct instruments involve direct administrative control over interest rates/quantities in the financial sector, and are a carryover from a planned economy.…”

mentioning

confidence: 99%

Fifth Ethiopia Economic Update

2016

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Recent economic developments Strong economic growth continued in 2014/15, but the drought slowed down Ethiopia's growth to 8 percent in 2015/16. The Ethiopian economy grew by 8.0 in 2015/16 due to the recent drought affecting agricultural production with spillovers on the trade sector. Construction and services sectors account for most of the growth from the supply side. On the demand side, growth is driven by investment followed by private consumption. Economic growth over the past years was accompanied by a reduction of unemployment, although it remained high. Urban unemployment in the formal sector declined over the last decade, albeit slowly, and was reduced from 23 percent in 2004 to 17 percent in 2015. The urban economy is dominated by the manufacturing, construction, and services sectors with some unskilled labor migration from rural areas. Chapter 2 of this report will analyze these issues in more detail. The fiscal deficit was virtually unchanged in 2014/15 and 2015/16. The general government fiscal deficit (excluding SOEs) remained modest at 2.4 percent in 2015/16 similar to the preceding year despite spending to finance drought affected areas. An increase in revenue collection, mainly from non-tax sources, compensated the increase in total expenditure and helped to contain the fiscal deficit. An increase in non-tax revenues was the result of larger than expected collection of state dividends from state-owned enterprises and windfall gains to the Fuel Stabilization Fund. On the expenditure side, the general government spending stance was relaxed only marginally in 2015/16 despite additional spending for drought relief and strong capital budget execution. Exports have had their worst performance in the last decade and the current account balance remained large. The chronic current account deficit (including official transfers) continued to deteriorate in 2015/16. The deficit reached 10.4 percent of GDP in 2015/16 improved slightly from 11.5 percent in 2014/15. This was caused by the large imbalance in import and export of goods and services, which has reached to 19.8 percent of GDP. Goods exports were disappointing due to both volume and price effects in 2014/15but a slight pickup in volumes again in 2015/16and an appreciating real (effective) exchange rate. The downward trend in exports now continues over the last four years. Export of goods dropped by 3.7 percent in 2015/16. Inflation is remarkable stable given the recent drought and even declining; it stood at 5.6 percent in October 2016. While inflation rose temporarily above ten percent over the past year, it is remarkably stable given the recent drought situation. Inflation entered to double digits in June 2015 and increased to 11.8 percent one year ago in October 2015; since then it has declined and reached 5.6 percent in October 2016. Reasons for the relatively low inflationary impact are related to high levels of cereal stock reserves that were used during the drought and increased wheat imports. This is a good moment to reconsider the monetary ...

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Monetary Policy Implementation: Results From a Survey

Cited by 15 publications

References 3 publications

Monetary Transmission in Low-Income Countries: Effectiveness and Policy Implications

Monetary Transmission in Low-Income Countries: Effectiveness and Policy Implications

How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence

Fifth Ethiopia Economic Update

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