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COVID-19 uncertainty, financial markets and monetary policy effects in case of two emerging Asian countries

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  • Behera, Harendra
  • Gunadi, Iman
  • Rath, Badri Narayan

Abstract

This paper examines the effectiveness of the monetary policies undertaken by the central bank on economic growth during COVID-19 uncertainty in case of India and Indonesia. We use an innovative framework of Growth-at-Risk as oppose to standard macroeconomic models, which can predict the growth in a much robust way particularly when an economy is facing shocks like COVID-19. The empirical results based on Growth-at-Risk model clearly reveal that effect of COVID-19 pandemic on economic growth is much adverse in comparison to actual declines. Further, this study shows the effectiveness of monetary and financial policies undertaken by the central banks of both India and Indonesia, which have actually subsided the adverse impact of COVID-19.

Suggested Citation

  • Behera, Harendra & Gunadi, Iman & Rath, Badri Narayan, 2023. "COVID-19 uncertainty, financial markets and monetary policy effects in case of two emerging Asian countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 173-189.
    • Handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:173-189
    DOI: 10.1016/j.eap.2023.03.001
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    More about this item

    Keywords

    COVID-19; Financial markets; Monetary policy; Growth-at-risk (GaR); Quantile regression; India; Indonesia;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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