A MONETARY BUSINESS CYCLE MODEL FOR INDIA.

A New Keynesian monetary business cycle model is constructed to study why monetary transmission in India is weak. Our models feature banking and financial sector frictions as well as an informal sector. The predominant channel of monetary transmission is a credit channel. Our main finding is that ba...

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Publicado en:Economic Inquiry Vol. 58; no. 3; pp. 1362 - 1387
Autores principales: Banerjee, Shesadri, Basu, Parantap, Ghate, Chetan
Formato: Artículo
Publicado: Wiley-Blackwell Jul2020
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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          Banerjee, Shesadri
          Basu, Parantap
          Ghate, Chetan
        affil:
          Madras Institute of Development Studies, Chennai, India
          Durham University Business School, Durham University, Mill Hill Lane, Durham DH1 3LB,, UK
          Economics and Planning Unit, Indian Statistical Institute, New Delhi, India
      su:
        Keynesian economics
        Business cycles
        Business models
        Liquidity (Economics)
        Interest rates
      sug:
        subj:
          Keynesian economics
          Business cycles
          Financial Transactions Processing, Reserve, and Clearinghouse Activities
          Central credit unions
          Business models
          Liquidity (Economics)
          Interest rates
      ab: A New Keynesian monetary business cycle model is constructed to study why monetary transmission in India is weak. Our models feature banking and financial sector frictions as well as an informal sector. The predominant channel of monetary transmission is a credit channel. Our main finding is that base money shocks have a larger and more persistent effect on output than an interest rate shock, as in the data. The presence of an informal sector hinders monetary transmission. Contrary to the consensus view, financial repression in the form of a statutory liquidity ratio and administered interest rates, does not weaken monetary transmission.
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      doctype: Article
      src: R
    language: English
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