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Relative Importance of Monetary Transmission Mechanism in Sri Lanka: An Empirical Investigation

Author

Listed:
  • Sooriyakumar Krishnapillai

    (University of Jaffna)

  • Vairavipillai pasupathy Sivanathan

    (University of Jaffna)

  • Anushiya Sireeranhan

    (University of Jaffna)

Abstract

This paper studies various monetary transmission channels in Sri Lanka to identify the more effective transmission mechanism and the policy rate that signals changes in monetary policy more effectively. The standard recursive Structural Vector Autoregression (SVAR) models are used to analyze monetary transmission mechanism. Impulse response of output to a one standard deviation positive shock in reserve money indicates that credit channel is more effective transmission channel than interest rate and exchange rate channel in Sri Lanka and repo rate is the policy rate that signals the changes in monetary policy more effectively.

Suggested Citation

  • Sooriyakumar Krishnapillai & Vairavipillai pasupathy Sivanathan & Anushiya Sireeranhan, 2016. "Relative Importance of Monetary Transmission Mechanism in Sri Lanka: An Empirical Investigation," Economics Bulletin, AccessEcon, vol. 36(1), pages 560-568.
    • Handle: RePEc:ebl:ecbull:eb-15-00548
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Monetary transmission mechanism; Structural Vector Auto Regression; Impulse response;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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