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Nonlinear impact of the conventional monetary policy: A cross-country evidence

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Názov: Nonlinear impact of the conventional monetary policy: A cross-country evidence
Autori: Jorge Pozo, Youel Rojas
Zdroj: Latin American Journal of Central Banking, Vol 6, Iss 2, Pp 100137- (2025)
Informácie o vydavateľovi: Elsevier, 2025.
Rok vydania: 2025
Zbierka: LCC:Banking
Predmety: GPD cycle, Credit cycle, Monetary policy, Non-linear effects, Banking, HG1501-3550
Popis: The possibility of non-linear responses to conventional monetary policy interventions has been a subject of ongoing research for a considerable period. However, the existing body of literature largely concentrates on analyzing individual economies or investigates only specific facets of these non-linearities. This paper aims to contribute to the literature and study the nonlinear impact of the conventional monetary policy, in two dimensions: direction and current monetary condition. This is the monetary policy effects depend on the monetary conditions and shock direction. Using a sample of both advanced and emerging economies, we find consistent evidence of asymmetric effectiveness of monetary policy. Initial movements of the policy rate are expected to have the largest effects, in contrast to the following movements in the same direction. Thus, the effectiveness of monetary policy wanes as the monetary stance tightens (i.e., as the policy interest rate rises). Conversely, the efficacy of expansionary monetary policy weakens as the monetary stance loosens (i.e., as the policy interest rate approaches its lower bound).
Druh dokumentu: article
Popis súboru: electronic resource
Jazyk: English
ISSN: 2666-1438
Relation: http://www.sciencedirect.com/science/article/pii/S266614382400019X; https://doaj.org/toc/2666-1438
DOI: 10.1016/j.latcb.2024.100137
Prístupová URL adresa: https://doaj.org/article/fecfb1fadd144d9f820e79d6a0a8f85f
Prístupové číslo: edsdoj.fecfb1fadd144d9f820e79d6a0a8f85f
Databáza: Directory of Open Access Journals
Popis
Abstrakt:The possibility of non-linear responses to conventional monetary policy interventions has been a subject of ongoing research for a considerable period. However, the existing body of literature largely concentrates on analyzing individual economies or investigates only specific facets of these non-linearities. This paper aims to contribute to the literature and study the nonlinear impact of the conventional monetary policy, in two dimensions: direction and current monetary condition. This is the monetary policy effects depend on the monetary conditions and shock direction. Using a sample of both advanced and emerging economies, we find consistent evidence of asymmetric effectiveness of monetary policy. Initial movements of the policy rate are expected to have the largest effects, in contrast to the following movements in the same direction. Thus, the effectiveness of monetary policy wanes as the monetary stance tightens (i.e., as the policy interest rate rises). Conversely, the efficacy of expansionary monetary policy weakens as the monetary stance loosens (i.e., as the policy interest rate approaches its lower bound).
ISSN:26661438
DOI:10.1016/j.latcb.2024.100137