The Impact of the Interest Channel of the Transmission Mexanism on the Economy – in Case of Uzbekistan
Keywords:
Interest Rate Channel, Monetary Policy, GDP, Least Squares with Breaks Model Inflation Rate, Short-Term Loan Rates
Abstract
In this scientific work, is studied the influence of the interest rate channel of the transmission mechanism on economy. The analysis was carried out in case of Uzbekistan. The indicators were converted to real values relative to 2017q1, covering the period 2003q1-2024q2. We conduct our empirical analysis through the Least Squares with Breaks model. Based on the results of the Least Squares with Breaks model, the main interest rate of the central bank, along with long-term loan rates, significantly impacted inflation control during the 2017Q2 – 2024Q2 period. Despite the numerous measures implemented to improve the central bank's activities during the 2017Q2 – 2024Q2 period, no significant changes were observed in the impact of the interest rate channel on gross production. The analysis indicates that even in this period, the primary factor influencing gross production remains changes in the money supply.
References
Andrieş, A. M. (2020). The risk-taking channel of monetary policy: Do macroprudential regulation and central bank independence influence the transmission of interest rates? Romanian Journal of Economic Forecasting, 23(3), 5–30. https://doi.org/10.2139/ssrn.3021249
Brunner K., Meltzer A. (1972). Money, Debt and Economic Activity / Journal of Political Economy № 80, pp.951-977.
Bernanke B., Blinder A. (1988). Credit, Money and aggregate Demand / The American Economic Review. №78– pp 435-439.
Bernanke, B. S. (2020). The new tools of monetary policy. American Economic Review, 110(4), 943-983.
Brandao-Marques, M. L., Gelos, M. R., Harjes, M. T., Sahay, M. R., & Xue, Y. (2020). Monetary policy transmission in emerging markets and developing economies. International Monetary Fund.
Chisha, K. (2018). Assessment of the interest rate and exchange rate channels of monetary policy transmission in Zambia: Evidence based on SVAR approach. International Journal of Sustainable Economy, 10(2), 184–203. https://doi.org/10.1504/IJSE.2018.090761
Durcova, J. (2021). The impact of interest rate transmission channel on the prices development in the eurozone countries. Montenegrin Journal of Economics, 17(2), 23–35. https://doi.org/10.14254/1800-5845/2021.17-2.2
Christiano J. Lawrence and Martin Eichenbaum (1995). Liquidity Effects, Monetary Policy, and the Business Cycle/ Journal of Money, Credit and Banking Vol. 27, No. 4, Part 1, November, pp. 1113-1136
Deb, M. P., Estefania-Flores, J., Firat, M., Furceri, D., & Kothari, S. (2023). Monetary policy transmission heterogeneity: Cross-country evidence. International Monetary Fund.
Falck, E., Hoffmann, M., & Hürtgen, P. (2021). Disagreement about inflation expectations and monetary policy transmission. Journal of Monetary Economics, 118, 15-31.
Hoang, T. T. (2020). The impact of interest rate channel on the monetary transmission mechanism in Vietnam. Accounting, 6(4), 569–580. https://doi.org/10.5267/j.ac.2020.4.003
Iddrisu, A. A. (2020). Revisiting interest rate and lending channels of monetary policy transmission in the light of theoretical prescriptions. Central Bank Review, 20(4), 183–192. https://doi.org/10.1016/j.cbrev.2020.09.002
Kaçar, B. (2020). Econometric Analysis for the Period Between 2003 and 2018 as Regards the Functioning of Interest Channel of Monetary Transmission Mechanism in Turkey. Uncertainty and Challenges in Contemporary Economic Behaviour, 61–75. https://doi.org/10.1108/978-1-80043-095-220201006
Ramey V.A. (1993). How important is the Credit Channel in the Transmission of Monetary Policy? NBER Working Paper No. 4285.
Tobin J. (1969). A General Equilibrium Approach to Monetary Theory.Journalof Money, Credit, and Banking, 1(1), February, pp. 15-29.
Urom, C. (2023). Dynamic integration and transmission channels among interest rates and oil price shocks. Quarterly Review of Economics and Finance, 87, 296–317. https://doi.org/10.1016/j.qref.2021.04.008
Vayanos, D., & Vila, J. L. (2021). A preferred‐habitat model of the term structure of interest rates. Econometrica, 89(1), 77-112.
Wang, Y., Whited, T. M., Wu, Y., & Xiao, K. (2022). Bank market power and monetary policy transmission: Evidence from a structural estimation. The Journal of Finance, 77(4), 2093-2141.
Wang, P. (2020). Contagion effects and risk transmission channels in the housing, stock, interest rate and currency markets: An Empirical Study in China and the U.S. North American Journal of Economics and Finance, 54. https://doi.org/10.1016/j.najef.2019.101113
Yildirim, D. C. (2023). Revisiting of Interest Rate Channel: Nonlinear transmission of Monetary Policy Shocks to the Turkish Economy. Journal of Central Banking Theory and Practice, 12(1), 199–223. https://doi.org/10.2478/jcbtp-2023-0009
Brunner K., Meltzer A. (1972). Money, Debt and Economic Activity / Journal of Political Economy № 80, pp.951-977.
Bernanke B., Blinder A. (1988). Credit, Money and aggregate Demand / The American Economic Review. №78– pp 435-439.
Bernanke, B. S. (2020). The new tools of monetary policy. American Economic Review, 110(4), 943-983.
Brandao-Marques, M. L., Gelos, M. R., Harjes, M. T., Sahay, M. R., & Xue, Y. (2020). Monetary policy transmission in emerging markets and developing economies. International Monetary Fund.
Chisha, K. (2018). Assessment of the interest rate and exchange rate channels of monetary policy transmission in Zambia: Evidence based on SVAR approach. International Journal of Sustainable Economy, 10(2), 184–203. https://doi.org/10.1504/IJSE.2018.090761
Durcova, J. (2021). The impact of interest rate transmission channel on the prices development in the eurozone countries. Montenegrin Journal of Economics, 17(2), 23–35. https://doi.org/10.14254/1800-5845/2021.17-2.2
Christiano J. Lawrence and Martin Eichenbaum (1995). Liquidity Effects, Monetary Policy, and the Business Cycle/ Journal of Money, Credit and Banking Vol. 27, No. 4, Part 1, November, pp. 1113-1136
Deb, M. P., Estefania-Flores, J., Firat, M., Furceri, D., & Kothari, S. (2023). Monetary policy transmission heterogeneity: Cross-country evidence. International Monetary Fund.
Falck, E., Hoffmann, M., & Hürtgen, P. (2021). Disagreement about inflation expectations and monetary policy transmission. Journal of Monetary Economics, 118, 15-31.
Hoang, T. T. (2020). The impact of interest rate channel on the monetary transmission mechanism in Vietnam. Accounting, 6(4), 569–580. https://doi.org/10.5267/j.ac.2020.4.003
Iddrisu, A. A. (2020). Revisiting interest rate and lending channels of monetary policy transmission in the light of theoretical prescriptions. Central Bank Review, 20(4), 183–192. https://doi.org/10.1016/j.cbrev.2020.09.002
Kaçar, B. (2020). Econometric Analysis for the Period Between 2003 and 2018 as Regards the Functioning of Interest Channel of Monetary Transmission Mechanism in Turkey. Uncertainty and Challenges in Contemporary Economic Behaviour, 61–75. https://doi.org/10.1108/978-1-80043-095-220201006
Ramey V.A. (1993). How important is the Credit Channel in the Transmission of Monetary Policy? NBER Working Paper No. 4285.
Tobin J. (1969). A General Equilibrium Approach to Monetary Theory.Journalof Money, Credit, and Banking, 1(1), February, pp. 15-29.
Urom, C. (2023). Dynamic integration and transmission channels among interest rates and oil price shocks. Quarterly Review of Economics and Finance, 87, 296–317. https://doi.org/10.1016/j.qref.2021.04.008
Vayanos, D., & Vila, J. L. (2021). A preferred‐habitat model of the term structure of interest rates. Econometrica, 89(1), 77-112.
Wang, Y., Whited, T. M., Wu, Y., & Xiao, K. (2022). Bank market power and monetary policy transmission: Evidence from a structural estimation. The Journal of Finance, 77(4), 2093-2141.
Wang, P. (2020). Contagion effects and risk transmission channels in the housing, stock, interest rate and currency markets: An Empirical Study in China and the U.S. North American Journal of Economics and Finance, 54. https://doi.org/10.1016/j.najef.2019.101113
Yildirim, D. C. (2023). Revisiting of Interest Rate Channel: Nonlinear transmission of Monetary Policy Shocks to the Turkish Economy. Journal of Central Banking Theory and Practice, 12(1), 199–223. https://doi.org/10.2478/jcbtp-2023-0009
Published
2024-11-12
How to Cite
Tolliboyevich, A. (2024). The Impact of the Interest Channel of the Transmission Mexanism on the Economy – in Case of Uzbekistan . Central Asian Journal of Innovations on Tourism Management and Finance, 5(7), 444-453. https://doi.org/10.51699/cajitmf.v5i7.775
Section
Articles
This work is licensed under a Creative Commons Attribution 4.0 International License.
In submitting the manuscript to the Central Asian Journal of Innovations on Tourism Management and Finance, the authors certify that:
- They are authorized by their co-authors to enter into these arrangements.
- The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
- That it is not under consideration for publication elsewhere,
- The publication has been approved by the author(s) and by responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
- They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
- They agree to the following license and copyright agreement.
License and Copyright Agreement
Authors who publish with Central Asian Journal of Innovations on Tourism Management and Finance agree to the following terms:
- Authors retain copyright and grant the Central Asian Journal of Innovations on Tourism Management and Finance right of first publication with the work simultaneously licensed under Creative Commons Attribution License (CC BY 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the Central Asian Journal of Innovations on Tourism Management and Finance published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
