Nexus of Monetary Policy and Productivity in an Emerging Economy: Supply-Side Transmission Evidence from India

Title

Nexus of Monetary Policy and Productivity in an Emerging Economy: Supply-Side Transmission Evidence from India

Creator

Manogna R.L.; Desai D.

Description

Monetary policy and its transmissions have been debated by various schools of thought. The purpose of this paper is to empirically tests whether monetary policy has supply side effect influencing Indian economys total factor productivity. This study uses ARDL model to ascertain the long run relationship between monetary policy proxies and total factor productivity (TFP). Cointegration tests reveal that total factor productivity has a relationship with all of the monetary policy proxies. The ARDL results reveal a negative relationship between TFP and some monetary policy proxies in the short run, but a positive effect in the long run. These results showcase the possible supply side transmission of monetary policy in India, which can help in determining an optimal policy so as to augment TFP, an important driver of economic growth. The study only focusses on the Indian economy and spillover effects of other Asian economies on Indias TFP can also be examined. The Author(s), under exclusive licence to The Indian Econometric Society 2024.

Source

Journal of Quantitative Economics, Vol-22, No. 1, pp. 45-61.

Date

2024-01-01

Publisher

Springer

Subject

ARDL; Cointegration; E52; E60; G10; G20; Long-run relationship; Monetary policy; Total factor productivity

Coverage

Manogna R.L., Department of Economics and Finance, BITS Pilani K K Birla Goa Campus, Sancoale, India; Desai D., Department of Economics, Christ University, Bangalore, India

Rights

Restricted Access

Relation

ISSN: 9711554

Format

Online

Language

English

Type

Article

Identifier

https://doi.org/10.1007/s40953-023-00380-9

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