ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Monetary ShocksSubscribe to Monetary Shocks

Monetary Shocks and Market Segmentation

This article uses a short-term macroeconomic model in Williamson (2009) featuring goods and financial market segmentation to analyse the effect of such a shock in an economy with substantial informality and cash dependence. The households with access to formal financial markets experience an increase in consumption and those without such access experience a decline.

Vulnerability of Emerging Market Economies to Exogenous Shocks

The transmission of global demand, oil supply and monetary policy shocks on the Indian economy are empirically examined using a parsimonious structural vector autoregression model for the period 1996 to 2016. Global demand shocks exert the most dominant effect causing fluctuations in various macroeconomic variables, whereas global monetary policy spillovers play an important role in affecting domestic short-term interest rates and financial asset prices. Global oil supply shocks, given its relative weightage as an intermediate input, have a greater impact on wholesale price index inflation than on consumer price index inflation. Given the rising trade and financial integration of the Indian economy, a quantitative impact analysis of these global shocks assumes importance for macroeconomic and monetary policy frameworks.

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