TRANSMISSION MECHANISMS OF MONETARY POLICY INETHIOPIA: EVIDENCE FROM STRUCTURAL VAR APPROACH.

Abstract

This study sought to examine the relative importance of different monetary policy transmission channels and its effect on key macroeconomic variables using quarterly time series data covering from 1994/95Q 1 2017/18Q 4 in Ethiopia.Structural Vector Autoregressive model (SVAR) was used address issues.All are tested for unit roots ADF PP test stability other necessary tests conducted.The estimation result indicates that aggregate, exchange rate credit private sector effective affecting output inflation Ethiopia, while interest channel is weak.From a perspective, results indicate National Bank Ethiopia required continuously monitor developments foreign markets order design policies.In addition, it would help NBE implement an achieving price support sustainable economic growth through appropriate channels.