@article{THESIS,
      recid = {2911},
      author = {Demid Enkhzaya},
      title = {Transmission of Monetary Policy in a Small Open Economy:  Evidence from Mongolia},
      publisher = {University of Chicago},
      school = {M.A.},
      address = {2021-05-31},
      number = {THESIS},
      abstract = {Monetary policy behaves in a forward-looking manner to  influence the economy due to uncertainty and time lag of  the effects of its policy actions. Therefore, the central  bank’s ability to achieve the targeted goals is highly  dependent on how reliable the transmission process is. This  paper attempts to examine the effectiveness of monetary  policy transmission mechanism in a small open economy, in  the case of Mongolia. It employs a structural vector  autoregression (VAR) model, which has a block exogeneity of  a small open economy and uses two different  identifications, the recursive and sign restrictions. The  results suggest that the bank lending channel is the most  effective transmission mechanism in Mongolia and operates  as predicted by theory. We find that the interest rate  channel works as influencing both price and output. The  exchange rate has an immediate significant pass-through to  price level; however, the effect on the real output is  unclear. The effects of monetary policy shock on the  interest rate and the exchange rate are sensitive to  different identification schemes used. The transmission  from monetary policy shock to interest rate is stronger in  the recursive model but weaker in the sign restriction  model. However, the transmission from monetary policy shock  to exchange rate is weaker in the recursive model but  stronger and persistent in the alternative model. Also, it  is found that, with small open economy restrictions, the  model resolves the exchange rate puzzle often found in  small open economies.},
      url = {http://knowledge.uchicago.edu/record/2911},
      doi = {https://doi.org/10.6082/uchicago.2911},
}