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Sooriyakumar Krishnapillai, Vairavipillai pasupathy Sivanathan and Anushiya Sireeranhan
''Relative Importance of Monetary Transmission Mechanism in Sri Lanka: An Empirical Investigation''
( 2016, Vol. 36 No.1 )
This paper studies various monetary transmission channels in Sri Lanka to identify the more effective transmission mechanism and the policy rate that signals changes in monetary policy more effectively. The standard recursive Structural Vector Autoregression (SVAR) models are used to analyze monetary transmission mechanism. Impulse response of output to a one standard deviation positive shock in reserve money indicates that credit channel is more effective transmission channel than interest rate and exchange rate channel in Sri Lanka and repo rate is the policy rate that signals the changes in monetary policy more effectively.
Keywords: Monetary transmission mechanism; Structural Vector Auto Regression; Impulse response
E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Manuscript Received : Aug 17 2015 Manuscript Accepted : Mar 24 2016

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