Open AccessCOVID-19 UNCERTAINTY AND MONETARY POLICY RESPONSES: EVIDENCE FROM EMERGING MARKET ECONOMIES
Author(s) -
K.P. Prabheesh,
Solikin M. Juhro,
Cicilia A. Harun
Publication year - 2022
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v24i4.1692
Subject(s) - monetary policy , economics , emerging markets , inflation (cosmology) , monetary economics , distributed lag , pandemic , covid-19 , cointegration , inflation targeting , transmission (telecommunications) , macroeconomics , econometrics , medicine , physics , electrical engineering , disease , pathology , theoretical physics , infectious disease (medical specialty) , engineering
This paper examines the effectiveness of monetary policy transmission in emerging economies during the COVID-19 outbreak. Using data from 14 emerging economies severely affected by the pandemic and the autoregressive distributed lag approach to cointegration, the study examines the effectiveness of monetary policy in affecting output, inflation, and credit. The study finds that: (1) In most economies, the monetary policy transmission to inflation is weakened due to the uncertainty created by the COVID-19 pandemic; (2) in a few economies, the transmission is found to be effective in stabilizing credit and output; and (3) the outbreak of the COVID-19 pandemic induced economic agents to follow a “cautionary” or “wait and see” approach.