Monetary policy transmission and macroeconomic policy coordination in Pacific island countries
During the global financial crisis, central banks in Pacific island countries eased monetary policy to stimulate economic activity. Judging by the ensuing movements in commercial bank interest rates and private sector credit, monetary policy transmission appears to be weak. This is confirmed by an e...
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| Veröffentlicht in: | Asian-Pacific economic literature 2012-05, Vol.26 (1), p.46-68 |
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| creator | Yang, Yongzheng Davies, Matt Wang, Shengzu Dunn, Jonathan Wu, Yiqun |
| description | During the global financial crisis, central banks in Pacific island countries eased monetary policy to stimulate economic activity. Judging by the ensuing movements in commercial bank interest rates and private sector credit, monetary policy transmission appears to be weak. This is confirmed by an empirical examination of interest rate pass‐through and credit growth. Weak credit demand and under‐developed financial markets seem to have limited the effectiveness of monetary policy, but the inflexibility of exchange rates and rising real interest rates have also served to frustrate the central banks' efforts despite a supporting fiscal policy. While highlighting the importance of developing domestic financial markets in the long run, this experience also points to the need to coordinate macroeconomic policies and to use all macroeconomic tools available in conducting countercyclical policies, including exchange rate flexibility. |
| doi_str_mv | 10.1111/j.1467-8411.2012.01333.x |
| format | Article |
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| identifier | ISSN: 0818-9935 |
| ispartof | Asian-Pacific economic literature, 2012-05, Vol.26 (1), p.46-68 |
| issn | 0818-9935 1467-8411 |
| language | eng |
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| source | Wiley Online Library Journals Frontfile Complete; PAIS Index; Business Source Complete |
| subjects | Asia Pacific Region Capital market Central banks Commercial banks Credit Economic activity Economic conditions Economic policy Exchange rates Finance Financial crisis Fiscal policy Foreign exchange rates Interest rates International finance Islands Macroeconomics Markets Monetary policy Securities markets Studies |
| title | Monetary policy transmission and macroeconomic policy coordination in Pacific island countries |
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