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041			_aENG
100			_aGhazanchya,n Manuk _91
245			_aUnraveling the monetary policy transmission mechanism in Sri Lanka
260			_aWashington _bInternational Monetary Fund _c2014
300			_a41p.
440			_aIMF Working Paper _n14/190 _91
520			_aThis paper examines the channels through which innovations to policy variables— policy rates or monetary aggregates—affect such macroeconomic variables as output and inflation in Sri Lanka. The effectiveness of monetary policy instruments is judged through the prism of conventional policy channels (money/interest rate, bank lending, exchange rate and asset price channels) in VAR models. The timing and magnitude of these effects are assessed using impulse response functions, and through the pass-through coefficients from policy to money market and lending rates. Our results show that (i) the interest rate channel (money view) has the strongest Granger effect (helps predict) on output with a 0.6 percent decrease in output after the second quarter and a cumulative 0.5 percent decline within a three-year period in response to innovations in the policy rate; (ii) the contribution from the bank lending channel is statistically significant (adding 0.2 percentage point to the baseline effect of policy rates) in affecting both output and prices but with a lag of about five quarters for output and longer for prices; and (iii) the exchange rate and asset price channels are ineffective and do not have Granger effects on either output or prices.
650			_aMonetary policy _91
650			_aEconometric models, _91
650			_aCentral Bank Policies _91
650			_aFinancial Markets _91
650			_aMoney market _91
650			_aSri Lanka _91
655			_aFinance
856			_uhttps://www.imf.org/external/pubs/ft/scr/2014/cr14286.pdf
942			_2udc _cEM
952			_w2014-12-04 _pCD 1661 _r2014-12-04 _40 _00 _bLIPS _10 _d2014-12-04 _8HH _70 _cE _yEM _uftp://ftp.ips.lk/ebooks/IMF/UnravelingtheMonetary.pdf _aLIPS
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