Monetary Transmission Mechanisms in Armenia A - AIPRG货币政策传导机制在亚美尼亚- aiprg.pptVIP

Monetary Transmission Mechanisms in Armenia: A Preliminary Evaluation Era Dabla-Norris International Monetary Fund Outline of Talk Recent monetary framework and decision to move to inflation targeting Monetary transmission mechanism Why important to study? Overview for Armenia and key weaknesses Evidence from VAR analysis Usefulness in transition context Recent literature (Starr (2005), Ganev et al (2002), Hericourt (2005) Key Features of Transmission Mechanism in Armenia Declining but high levels of dollarization Low levels of monetization and financial intermediation Shallow financial markets; low elasticity of bank credit to interest rates Excess liquidity in banking system High spreads Significance of remittances Summary of Results Some evidence of effect of interest rates on prices but not output Exchange rate important channel for monetary policy transmission to prices Monetary aggregates have real and nominal effects – can play role in transition to inflation targeting Next Steps Better understanding of links from: policy instrument to other financial variables (term structure of market interest rates; loan and deposit rates) financial variables to aggregate demand and output gap output gap, exchange rate, and inflation expectations to inflation Small structural macroeconomic model of the economy * * Unstable Money Multiplier and Velocity ... Rapid growth of Monetary Aggregates against backdrop of low inflation From 2006, repo rate to be used to signal stance of Monetary Policy... Identifying the channels through which monetary policy decisions affect aggregate demand and supply, and hence output and inflation: (1) from a change in official interest rates to financial and asset market; (2) from financial and asset markets to spending behavior of firms and households Channels: (i) interest channel; (ii) exchange rate; (iii) credit; (iv) asset price; (v) expectations Understanding the transmission process is important for the appropriate design and