A SURVEY OF LITERATURE: MONETARY POLICY TRANSMISSION MECHANISM IN INDIA

Praveen Kumar; Mahendra Ranawat

doi:10.29121/shodhkosh.v5.i5.2024.3425

Authors

Praveen Kumar Research Scholar, Department of Economics, Faculty of Social Sciences & Humanities, Bhupal Nobles’ University, Udaipur, Rajasthan, and Assistant Professor, Department of Commerce, Keshav Mahavidyalaya, University of Delhi.
Dr. Mahendra Ranawat Associate Professor, Department of Economics, Faculty of Social Sciences & Humanities, Bhupal Nobles’ University, Udaipur, Rajasthan

DOI:

https://doi.org/10.29121/shodhkosh.v5.i5.2024.3425

Keywords:

Monetary Policy, Monetary Transmission Mechanism, Money Supply, Inflation

Abstract [English]

The literature review is significant in understanding the past evolution and the current state of knowledge regarding the given discipline or subject. However, every research article published by anyone contains certain part of literature review concerned with their respective area of study. The main aim the study is to provide the comprehensive review of literature regarding monetary policy transmission mechanism in India. For this purpose, the paper will be reviewed on the basis of four parameters i.e., variables used, theoretical models used for estimation, methodology and tools used and findings of the study.

References

Acosta-Ormaechea, S., & Coble, D., (2011). Monetary transmission in dollarized and non-dollarized economies: The case of Chile, New Zealand, Peru and Uruguay, International Monetary Fund, IMF Working Paper No. 11/87. DOI: https://doi.org/10.5089/9781455234097.001

Al – Mashat, R (2003). Monetary policy transmission in India: Selected issues and statistical appendix, International Monetary Fund, Country Report No. 03/261. pp 64 – 95 DOI: https://doi.org/10.5089/9781451818574.002

Aleem, A. (2010). Transmission mechanism of monetary policy in India. Journal of Asian Economics, 21(2), 186 – 197. DOI: https://doi.org/10.1016/j.asieco.2009.10.001

Angeloni, I., Kashyap, A. K., Mojon, B., & Terlizzese, D. (2003). The output composition puzzle: a difference in the monetary transmission mechanism in the euro area and the United States, Journal of Money, Credit, and Banking. Vol. 35 No. 6, pp. 1265 – 1306. DOI: https://doi.org/10.1353/mcb.2004.0018

Arestis, P., & Sawyer, M. (2006). Can monetary policy affect the real economy? Levy Economics Institute of Bard College, a Malcolm Sawyer, University of Leeds, Working paper no. 355 http://hdl.handle.net/10419/31655

Banerjee, S., Behera, H., Bordoloi, S., & Kumar, R. (2018). Role of Financial frictions in monetary policy transmission in India. Working Paper (DEPR) 44/2018, Reserve Bank of India. https://doi.org/10.1111/ecot.12355 DOI: https://doi.org/10.1111/ecot.12355

Bernanke, B. S., & Blinder, S. A. (1992). The Federal Funds Rate and the Channels of Monetary Transmission, The American Economic Review, Vol. 82. No.4 pp 901 – 921.

Bernanke, B. S., & Gertler, M. (1995). Inside the black box: The credit channel of monetary policy transmission. Journal of Economic Perspectives 9, no. 4: 27 – 48. Doi: 10.1257/jep.9.4.27 DOI: https://doi.org/10.1257/jep.9.4.27

Bhattacharya, R., Patnaik, I., & Shah, A. (2011), “Monetary policy transmission in an emerging market setting”, Working Paper WP/11/5, International Monetary Fund. DOI: https://doi.org/10.5089/9781455211838.001

Bhaumik, S. K., Dang, V., & Kutan, A. M. (2011). Implications of bank ownership for the credit channel of monetary policy transmission: Evidence from India. Journal of Banking & Finance, 35 (9), 2418 – 2428. DOI: https://doi.org/10.1016/j.jbankfin.2011.02.003

Bhoi, B. K., Mitra, A. K., Singh, J. B., & Sivaramakrishnan, G. (2017). Effectiveness of alternative channels of monetary policy transmission: some evidence for India. Macroeconomics and Finance in Emerging Market Economies, 10 (1), 19 - 38.

https://doi.org/10.1080/17520843.2016.1188837 DOI: https://doi.org/10.1080/17520843.2016.1188837

Boivin, J., Kiley M. T., & Mishkin, F. S. (2010), How has the monetary transmission mechanism evolved overtime? National Burean of Economic Research, Working Paper 15879 DOI: https://doi.org/10.3386/w15879

http://www.nber.org/papers/w15879

Chong, B.S., Liu, M. H., & Shrestha, K. (2006). Monetary Transmission via the Administered Interest Rates Channel. Journal of Banking and Finance, 30,1467-1484.

http://dx.doi.org/10.1016/j.jbankfin.2005.03.024 DOI: https://doi.org/10.1016/j.jbankfin.2005.03.024

Clarida, R., Gali, J., & Gertler, M. (2000). Monetary policy rules and macroeconomic stability: Evidence and some theory. The Quarterly Journal of economics, Vol. 115 (1), 147-180. https://www.jstor.org/stable/2586937 DOI: https://doi.org/10.1162/003355300554692

Cover, J. P. (1992). Asymmetric Effects of Positive and Negative Money-Supply Shocks. The Quarterly Journal of Economics, Vol. 107(4), Pages 1261-1282.

https://doi.org/10.2307/2118388 DOI: https://doi.org/10.2307/2118388

Das, S. (2015). Monetary policy in India: Transmission to bank interest rates. IMF Working papers 15/129, International Monetary Fund. DOI: https://doi.org/10.5089/9781513598796.001

Dhal, S. (2011). Industry effects of the monetary transmission mechanism in India: an empirical analysis of use-based industries, Reserve Bank of India Occasional Papers, Vol.32, pp. 39-79.

Dua, P. (2020). Monetary policy framework in India. Indian Economic Review, Springer, pp 117 – 154.

https://doi.org/10.1007/s41775-020-00085-3 DOI: https://doi.org/10.1007/s41775-020-00085-3

Endut, N., Morley, J., & Tien, P. L. (2016). The changing transmission mechanism of U.S. monetary policy, UNSW Business School Research Paper no. 2015, UNSW, Sydney.

https://ssrn.com/abstract=2823666 or http://dx.doi.org/10.2139/ssrn.2823666 DOI: https://doi.org/10.2139/ssrn.2823666

Fu, Q., and Liu, X. (2015), Monetary policy and dynamic adjustment of corporate investment: A policy transmission channel perspective, China Journal of Accounting Research, Volume – 8, Issue – 2, pages 91 – 109. https://doi.org/10.1016/j.cjar.2015.03.001 DOI: https://doi.org/10.1016/j.cjar.2015.03.001

Ghosh, S. (2009). Industry effects of monetary policy: evidence from India, Indian Economic Review, Volume 44 No. 1pp. 89-105. https://www.jstor.org/stable/29793929

John, J., Mitra, A. K., Raj, J., & Rath, D. P. (2018). Asset quality and monetary transmission in India. Reserve Bank India Occasional Papers Volume 37(1&2)

Kannan, R., Sanyal, S. & Bhoi, B. B. (2006). Monetary condition index for India, Reserve Bank of India, Occasional papers Volume 27 No. 3.

Kapur, M., & Behera, H. (2012). Monetary transmission mechanism in India: A quarterly model. Reserve Bank of India Working Paper No. – 09. DOI: https://doi.org/10.2139/ssrn.2120792

Khundrakpam, J. K., & Jain, R. (2012). Monetary Policy Transmission in India: A peep Inside the Black Box, Reserve Bank of India Working Paper No. WPS (DEPR): 11/ 2012.

Khundrakpam, J. K. (2012). Estimating Impacts of Monetary Policy on Aggregate Demand in India, Reserve Bank of India Working Paper Series (DEPR): 18 University Library of Munich.

https://mpra.ub.uni-muenchen.de/50902/

Kleimeier, S. & Sander, H. (2006). Expected versus unexpected monetary policy impulses and interest rate pass-through in euro-zone retail banking markets, Journal of Banking and Finance, Vol. 30 No. 7, pp. 1839-1870.

Doi: 10.1016/j.jbankfin.2005.07.006 and 10.26481/umamet.2004001 DOI: https://doi.org/10.1016/j.jbankfin.2005.07.006

Mishkin, F. S. (1995). Symposium on the Monetary Transmission Mechanism, Journal of Economic Perspective, Volume 9, No. 4 pages 3 – 10. DOI: https://doi.org/10.1257/jep.9.4.3

Mishkin, F. S. (1996). Channels of Monetary Transmission and Lessons for Monetary Policy, NBER Working Paper No. 5464, National Bureau of Economic Research. DOI: https://doi.org/10.3386/w5464

Mishkin, F. S. (2001). The Transmission Mechanism and the Role of Asset Prices in Monetary Policy, NBER Working Paper No. 8617, National Bureau of Economic Research. DOI: https://doi.org/10.3386/w8617

Mishra, P., Montiel, P. J., & Spilimbergo, A. (2010). Monetary Transmission in Low Income Countries, International Monetary Fund, Working Paper No. 10/223 DOI: https://doi.org/10.5089/9781455208883.001

https://www.imf.org/-/media/Websites/IMF/imported-full-text-pdf/external/pubs/ft/wp/2010/_wp10223.ashx

Morsink, J., & Bayoumi, T. (2001). A Peek Inside the Black Box: The Monetary Transmission Mechanism in Japan, International Monetary Fund (IMF) staff Papers, Volume 48 Number 1. https://www.imf.org/external/pubs/ft/staffp/2001/01a/pdf/morsink.pdf DOI: https://doi.org/10.2307/4621659

Nachane, D. M. & Lakshmi, R. (2002). Changing monetary policy lags, Indian Economic Journal, Volume 50 (1), pp. 6-16.

DOI:10.1177/0019466220020102 DOI: https://doi.org/10.1177/0019466220020102

Pandit, B. L., & Vashisht, P. (2011). Monetary policy and credit channel in India and some EMEs. Indian Council for Research on International Economic Relations (No. 256, pp, 1 – 22). Working Paper.

Pandit, B. L., Mittal, A., Roy, M., & Ghosh, S. (2006). Transmission of monetary policy and the bank lending channel: analysis and evidence for India. Reserve Bank of India, Department of Economic Analysis and Policy, Development Research Group Study, Study no.25, RBI. https://www.researchgate.net/publication/255652255

Patra, M. D., & Kapur, M. (2010). A monetary policy model without money for India, International Monetary Fund, Working paper No. 10/183 https://www.imf.org/-/media/Websites/IMF/imported-full-textpdf/external/pubs/ft/wp/2010/_wp10183.ashx DOI: https://doi.org/10.5089/9781455202171.001

Raghavan, M., & Silvapulle, P. (2007). Structural VAR Approach to Malaysian Monetary Policy Framework: Evidence from the Pre – and Post – Asian Crisis Periods, Department of Econometrics and Business Statistics, Monash University, Caulfield, VIC 3145, Australia

Ramey, V. (1993). How important is the credit channel in the transmission of monetary policy? Carnegie-Rochester Conference Series on Public Policy, 39, pages 1 – 45. https://econweb.ucsd.edu/~vramey/research/Credit_Channel.pdf DOI: https://doi.org/10.1016/0167-2231(93)90001-D

Ray, P., Joshi, H., & Saggar, M. (1998). New Monetary Transmission Channels – Roles of interest rates and exchange rate in conduct of Indian monetary policy, Economic and Political Weekly Vol.33 No.44, pp 2787 – 2794

https://www.epw.in/journal/1998/44/special-articles/new-monetary-transmission-channels-role-interest-rates-and-exchange

Reserve Bank of India (2004), Report on Currency and Finance 2003-04.

Sengupta, N. (2014). Changes in Transmission Channels of Monetary Policy in India, Economic and Political Weekly, Vol. 49. Issue No. 49https://www.jstor.org/stable/24481055

Sims, C. (1980). Macroeconomics and Reality, Econometrica, Vol. 48, pp. 1 – 48. DOI: https://doi.org/10.2307/1912017

http://links.jstor.org/sici?sici=00129682%28198001%2948%3A1%3C1%3AMAR%3E2.0.CO%3B2-A

Singh, B. (2011). How Asymmetric is the Monetary Policy Transmission to Financial Markets in India? Reserve Bank of India, Occasional Papers, Volume no. 32/2, pages 1 – 37

https://www.researchgate.net/publication/275634917

Singh, K. & Kaliranjan, K. (2003), An empirical analysis of Monetary transmission in India, Economic reforms and the liberalization of the Indian Economy, Cheltenham, UK, Edward Elgar, pp. 275-308. DOI: https://doi.org/10.4337/9781035304790.00025

Singh, K., & Kaliranjan, K. (2007), Monetary Transmission in Post-Reform India: An Evaluation, Journal of Asia Pacific Economy,12:2, pp 158-187, DOI:10.1080/13547860701252371. DOI: https://doi.org/10.1080/13547860701252371

Smets, F., & Wouters, R. (2002). An Estimated Stochastic Dynamic General Equilibrium Model of The Euro Area, European Central Bank, Working Paper Series, Working Paper No. 171, pp. 1 – 69. DOI: https://doi.org/10.2139/ssrn.1691984

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp171.pdf

Taylor, J. B. 1995. The monetary transmission mechanism: An empirical framework. Journal of Economic Perspectives, Volume 9 (4), pp 11 – 26. https://www.jstor.org/stable/2138388 DOI: https://doi.org/10.1257/jep.9.4.11

Taylor, J. B., & Williams J. B. (2010). Simple and Robust Rules for Monetary Policy, National Bureau of Economic Research, Working Paper 15908 DOI: https://doi.org/10.3386/w15908

http://www.nber.org/papers/w15908