Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia

In order to achieve an effective monetary policy, recognising the main transmission mechanism channels that contributes in propagating monetary innovations to the real economic activity is essential. It is also important to ensure that there is a full passthrough from policy rate to the retail rates...

Full description

Saved in:

Bibliographic Details
Main Author:	Ramlee, Mohd Helmi
Format:	Thesis
Language:	English English
Published:	2010
Subjects:	Transmission mechanism (Monetary policy) - Malaysia. Monetary policy - Malaysia.
Online Access:	http://psasir.upm.edu.my/id/eprint/19484/1/FEP_2010_8_F.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-upm-ir.19484
record_format	uketd_dc
spelling	my-upm-ir.194842013-04-08T03:25:27Z Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia 2010-10 Ramlee, Mohd Helmi In order to achieve an effective monetary policy, recognising the main transmission mechanism channels that contributes in propagating monetary innovations to the real economic activity is essential. It is also important to ensure that there is a full passthrough from policy rate to the retail rates. This study attempts to identify the relative importance of monetary transmission mechanism channels in Malaysia. A VAR (Vector Autoregression) method is employed to study the propagation of monetary disturbances to the economy. In order to assess the relative importance of transmission channels, each channel will be exogenised and the response of output with respect to monetary shock is extracted and compared among channels. The empirical results show that the credit channel appears to be the most important channel, followed by exchange rate channel, interest rate channel and asset price channel. It is also imperative to understand the central bank behavior in its policy conduct. By using Taylor rule, Malaysia does conform to the Taylor’s principle over the long term period. Other countries that were included in this study namely United States, United Kingdom, Indonesia and Thailand also conform to the Taylor’s principle aside from the Philippines. This finding suggests that the Central Bank of Malaysia has performed the appropriate policy response in the past, in order to achieve its goal in sustainable growth and price stability. Transmission mechanism (Monetary policy) - Malaysia. Monetary policy - Malaysia. 2010-10 Thesis http://psasir.upm.edu.my/id/eprint/19484/ http://psasir.upm.edu.my/id/eprint/19484/1/FEP_2010_8_F.pdf application/pdf en public masters Universiti Putra Malaysia Transmission mechanism (Monetary policy) - Malaysia. Monetary policy - Malaysia. Faculty of Economic and Management English
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English English
topic	Transmission mechanism (Monetary policy) - Malaysia. Monetary policy - Malaysia.
spellingShingle	Transmission mechanism (Monetary policy) - Malaysia. Monetary policy - Malaysia. Ramlee, Mohd Helmi Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia
description	In order to achieve an effective monetary policy, recognising the main transmission mechanism channels that contributes in propagating monetary innovations to the real economic activity is essential. It is also important to ensure that there is a full passthrough from policy rate to the retail rates. This study attempts to identify the relative importance of monetary transmission mechanism channels in Malaysia. A VAR (Vector Autoregression) method is employed to study the propagation of monetary disturbances to the economy. In order to assess the relative importance of transmission channels, each channel will be exogenised and the response of output with respect to monetary shock is extracted and compared among channels. The empirical results show that the credit channel appears to be the most important channel, followed by exchange rate channel, interest rate channel and asset price channel. It is also imperative to understand the central bank behavior in its policy conduct. By using Taylor rule, Malaysia does conform to the Taylor’s principle over the long term period. Other countries that were included in this study namely United States, United Kingdom, Indonesia and Thailand also conform to the Taylor’s principle aside from the Philippines. This finding suggests that the Central Bank of Malaysia has performed the appropriate policy response in the past, in order to achieve its goal in sustainable growth and price stability.
format	Thesis
qualification_level	Master's degree
author	Ramlee, Mohd Helmi
author_facet	Ramlee, Mohd Helmi
author_sort	Ramlee, Mohd Helmi
title	Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia
title_short	Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia
title_full	Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia
title_fullStr	Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia
title_full_unstemmed	Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia
title_sort	monetary transmission mechanism and behavior of bank negara malaysia
granting_institution	Universiti Putra Malaysia
granting_department	Faculty of Economic and Management
publishDate	2010
url	http://psasir.upm.edu.my/id/eprint/19484/1/FEP_2010_8_F.pdf
_version_	1747811393042644992

Monetary Transmission Mechanism and Behavior of Bank Negara Malaysia

Similar Items