Conventional empirical models of monetary policy transmission in emerging market economies produce puzzling results: monetary tightening often leads to an increase in prices (the price puzzle) and depreciation of the currency (the foreign exchange puzzle). This paper shows that incorporating forward-looking expectations into standard open economy structural vector autoregressive models resolves these puzzles. Specifically, the models are augmented...
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详细
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2024/11/14
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政策研究报告
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WPS10974
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1
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2024/11/14
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Disclosed
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Resolving Puzzles of Monetary Policy Transmission in Emerging Markets