Channels of Monetary Policy Transmission in India: A Post-Reforms Macro-Econometric Analysis

This paper examines the effectiveness and relative strength of various channels of monetary policy transmission in India during the post reform period using the monthly data spanning over 1991:M4 to 2017:M12. The analysis has been via regular and seasonal unit ischolar_main methods and graphical method has been applied for identification of structural breaks. Alternative methods namely, HEGY, Augmented Dickey Fuller (ADF), Phillips-Perron (PP), KPSS and DF-GLS have been applied for testing the presence of seasonal and regular unit ischolar_mains. The long-run and short-run behaviors of different channels have been analyzed through Structural Vector Error Correction Model (VECM). In India, first and second important channels of monetary policy transmission mechanism are Credit and Interest rate.