COVID-19 UNCERTAINTY AND MONETARY POLICY RESPONSES: EVIDENCE FROM EMERGING MARKET ECONOMIES

Authors

K.P. Prabheesh, Indian institute of technology Hyderabad, IndiaFollow
Solikin M. Juhro, Bank Indonesia, IndonesiaFollow
Cicilia Anggadewi Harun, Bank Indonesia, IndonesiaFollow

Document Type

Article

Abstract

This paper examines the effectiveness of monetary policy transmission in emerging economies during the COVID-19 outbreak. Using data from 14 emerging economies severely affected by the pandemic and the autoregressive distributed lag approach to cointegration, the study examines the effectiveness of monetary policy in affecting output, inflation, and credit. The study finds that: (1) In most economies, the monetary policy transmission to inflation is weakened due to the uncertainty created by the COVID-19 pandemic; (2) in a few economies, the transmission is found to be effective in stabilizing credit and output; and (3) the outbreak of the COVID-19 pandemic induced economic agents to follow a “cautionary” or “wait and see” approach.

Recommended Citation

Prabheesh, K.P.; Juhro, Solikin M.; and Harun, Cicilia Anggadewi (2021) "COVID-19 UNCERTAINTY AND MONETARY POLICY RESPONSES: EVIDENCE FROM EMERGING MARKET ECONOMIES," Bulletin of Monetary Economics and Banking: Vol. 24: No. 4, Article 5.
DOI: https://doi.org/10.21098/bemp.v24i4.1692
Available at: https://bulletin.bmeb-bi.org/bmeb/vol24/iss4/5

First Page

489

Last Page

516

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

India

Affiliation

Indian institute of technology Hyderabad