Monetary Policy, Structural Break, and the Monetary Transmission Mechanism in Thailand

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.

Bibliographic Details

Main Author:	Hesse, Heiko
Language:	English
Published:	World Bank, Washington, DC 2007-06
Subjects:	ACCELERATOR, BALANCE SHEET, BALANCE SHEETS, BANK LENDING, BUSINESS CYCLES, CAPITAL ACCOUNT, CAPITAL MARKETS, CENTRAL BANK, CONSUMER PRICE INDEX, CREDIT CONDITIONS, CURRENCY, CURRENT ACCOUNT, DEMAND DEPOSITS, DEVALUATION, DOMESTIC COMPANIES, DOMESTIC INTEREST RATES, DOMESTIC PRICES, ECONOMIC BOOM, ENDOGENOUS VARIABLES, EQUILIBRIUM, EXCHANGE RATE, EXCHANGE RATE DEPRECIATION, EXCHANGE RATE PEG, EXCHANGE RATE REGIME, EXOGENOUS VARIABLES, EXPORTS, EXTERNAL SHOCKS, FINANCIAL CRISIS, FOREIGN CAPITAL, FOREIGN COMPETITION, FOREIGN DEBT, FOREIGN EXCHANGE, FOREIGN EXCHANGE RATE, FOREIGN INTEREST RATE, FOREIGN INTEREST RATES, GDP, GOVERNMENT DEBT, HIGH VOLATILITY, HYPOTHESIS TESTING, INTEREST RATE POLICY, INTEREST RATES, INTERNATIONAL FINANCIAL STATISTICS, INTERNATIONAL TRADE, LIQUIDITY, LOAN RATES, M1, M2, MACROECONOMIC FRAMEWORK, MACROECONOMIC IMBALANCES, MACROECONOMIC VARIABLES, MONETARY EXPANSION, MONETARY POLICY, MONETARY POLICY FRAMEWORK, MONETARY POLICY RULE, MONETARY SHOCKS, MONETARY TARGETING, MONETARY TRANSMISSION MECHANISM, MONEY BALANCES, MONEY DEMAND, MONEY MARKET, MONEY SUPPLY, MORAL HAZARD, MORAL HAZARD PROBLEMS, MULTIPLE EQUILIBRIA, NEUTRALITY OF MONEY, NOMINAL ANCHOR, NOMINAL EXCHANGE RATE, OPEN CAPITAL MARKETS, OPEN MARKET OPERATIONS, OPPORTUNITY COST, OPPORTUNITY COSTS, OUTPUT, OUTPUT GROWTH, PHILLIPS CURVE, POLICY RESEARCH, POLITICAL INSTABILITY, PRIVATE BANKS, REAL EXCHANGE, REAL EXCHANGE RATE, REAL GDP, RESERVES, RISK PREMIUM, SCENARIOS, STATISTICAL INFERENCE, TAX SYSTEM, THAI BAHT, TRANSMISSION MECHANISM, TRANSMISSION MECHANISMS, VALUE ADDED, VELOCITY OF MONEY, VULNERABILITY,
Online Access:	http://documents.worldbank.org/curated/en/2007/06/7694738/monetary-policy-structural-break-monetary-transmission-mechanism-thailand https://hdl.handle.net/10986/7396
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