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Unvealing Monetary Policy Transmission on Inflation Targeting Economies: The Wealth-Consumption Channel

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  • Juan Andres Espinosa Torres; Sebastian Sanin Restrepo
  • Sebastian Sanin-Restrepo

Abstract

This paper test the presence of the consumption-wealth channel on the trans- mission of monetary policy on economies following the Inflation Targeting (IT) framework. Combining a Structural Vector Autoregression (SVAR) method-ology and a policy counterfactual exercise, this channel is modelled for 27economies divided into four implementing window dates: first, early, inter-mediate and recent implementers. Results show that effects derived from this channel are most significant for those economies that implemented IT earlier, with some particular exceptions among the other groups. This suggest that long-run stability and definition of IT regimes play a significant role to make monetary policy transmit to the economy.

Suggested Citation

  • Juan Andres Espinosa Torres; Sebastian Sanin Restrepo & Sebastian Sanin-Restrepo, 2018. "Unvealing Monetary Policy Transmission on Inflation Targeting Economies: The Wealth-Consumption Channel," Vniversitas Económica 17012, Universidad Javeriana - Bogotá.
    • Handle: RePEc:col:000416:017012
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    More about this item

    Keywords

    monetary policy transmission; inflation targeting; asset prices.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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