Research Project (Macroeconomics) – Financial Structure, Institutional Quality and Monetary Policy Transmission: A Meta Analysis

• Completion date मार्च, 2020
• Sponsor Bill and Melinda Gates Foundation (BMGF)
• Project leader Shruti Tripathi
• Consultants/Other authors Sahana Roy Chowdhury (IMI, Kolkata), Sabarni Chowdhury
• Focus
  The long-standing empirical literature of monetary policy transmission acknowledges the weak transmission of monetary policy shocks to real activities and inflation in emerging economies. A fragile financial system, a low level of financial integration and weak institutions are often cited as the reasons for the lack of monetary policy transmission in these economies. This paper investigates the extent to which these factors explain the variation in the extent of monetary policy transmission in a comprehensive set of developed and developing economies using a meta-analysis framework. We find that the degree of financial development captured by various financial indicators explains cross-country variations in the magnitude and time lag of monetary policy transmission. We also examine the role of financial accelerator in transmission magnitude to output growth.