Monetary policy, structural break, and the monetary transmission mechanism in Thailand, Vol. 1 of 1

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Monetary policy, structural break, and the monetary transmission mechanism in Thailand

Author:	Hesse, Heiko;	Collection Title:	Policy, Research working paper ; no. WPS 4248
Country:	Thailand;	Date Stored:	2007/06/07
Document Date:	2007/06/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	East Asia and Pacific
Report Number:	WPS4248	SubTopics:	Economic Stabilization; Economic Theory & Research; Macroeconomic Management; Fiscal & Monetary Policy; Financial Economics
Volume No:	1 of 1

Summary: The paper studies monetary policy and the monetary transmission mechanism in Thailand in light of the Asian crisis in 1997. Existing studies that adopt structural vector auto-regression (VAR) approaches do not give a clear and agreed-upon view how monetary shocks are transmitted to the Thai economy that is subject to structural breaks. This study explicitly models a pre-crisis and post-crisis cointegrated VAR model. This analysis supports arguments that the trinity of open capital markets, pegged exchange rate regime, and monetary policy autonomy is inconsistent in the pre-crisis period. In contrast, the model points to an effective monetary policy in the post-crisis period. Further, the author analyzes the common driving trends of the model.


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