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The Effects Of A Monetary Policy Shock: Evidence From India

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Executive Summary

This paper empirically investigates the transmission of the Reserve Bank of India (RBI)'s monetary policy at a time when multiple indicator approaches are popular, using a structural VAR approach. The authors find that non-recursive zero restrictions must be imposed on the contemporaneous structural parameters to identify a monetary policy shock and that the RBI regards the current value of money as the centered information variable of the monetary policy, though exercising leverage over the real interest rate.

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