 The Transmission Mechanism in Armenia: New Evidence from a Regime Switching VAR AnalysisInternational Monetary Fund No 2010/270, IMF Working Papers from International Monetary Fund Abstract: The introduction of inflation targeting in 2006, together with important economic developments such as dedollarization, marked the beginning of a new macroeconomic framework in Armenia, which is likely to have changed the effectiveness of monetary policy. This paper is the first attempt to analyze whether the transmission mechanism in Armenia has been subject to a structural break by employing a Markov-Switching VAR framework. Results support the existence of such a structural break around the time inflation targeting was introduced and reduced levels of dollarization were observed. Results from introducing a threshold variable into this framework furthermore show that reduced levels of dollarization are an important determinant of the effectiveness of monetary policy. Keywords: WP; transmission mechanism; central bank; dollarization regime; economic activity; Armenia; monetary policy; inflation targeting; dollarization; loan dollarization; interest rate channel; dollarization level; foreign currency; inflation expectation; credit dollarization; exchange rate channel; Exchange rate pass-through; Exchange rates; Central bank policy rate; Global (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2010/270 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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