TY  - GEN
T1  - Monetary transmission mechanism in the Philippines the interest rate channel
JF  - The Philippine Review of Economics
A1  - Dakila, Francisco G., Jr
A1  - Paraso, Ma. Digna G.
LA  - English
YR  - 2005
UL  - https://tuklas.up.edu.ph/Record/UP-1685594773862408603
AB  - The transmission mechanism of monetary policy explains how monetary policy works-that is, how economic and financial variables respond to monetary policy actions. In view of the complexity of the transmission process, properly identifying the process as it works in the Philippines requires considerable effort and volume of work. In the context of inflation targeting, for example, an understanding of the monetary policy transmission mechanism is essential to understanding what monetary policy can and should do and at what point in time actions should be undertaken to contain or offset disturbances that could threaten the achievement of the inflation target. In this paper, we concentrate on the interest rate channel. We present initial estimates, obtained from general-to-specific modeling, and validate the results using a vector error correction model. The results confirm expectations that an increase in the 91-day Tbill rate generates a lagged reduction in the level of fixed capital formation and a decline in GDP growth, which is strongest about four quarters after the interest rate shock. However, the results also show that there is likewise an initial increase in the inflation rate; by the eighth quarter, however, inflation falls below the baseline. We view our results as an initial step in a research program that seeks to specify the various channels of monetary policy impact.
NO  - Title was 'Philippine Review of Business and Economics' until 1979. Title changed to 'Philippine Review of Economics and Business' from 1980-2000, and again changed to 'Philippine Review of Economics' since 2001.
CN  - ARTICLE-2935
KW  - Inflation (Finance) : Philippines.
KW  - Interest rates : Philippines.
KW  - Monetary policy : Philippines.
ER  -