When Policy Bites: State- Dependent Monetary Policy Transmission in Emerging Markets

2026

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This paper reveals that monetary policy transmission in emerging markets is not uniform, but rather depends significantly on the prevailing economic conditions, offering crucial insights for policymakers.

* Analyzes how monetary policy transmission to output and prices varies across different economic states in emerging markets.
* Examines the impact of the business cycle, trend inflation levels, and monetary policy stance on the effectiveness of policy.
* Provides evidence supporting theories of financial frictions, state-dependent pricing, and rational inattention in explaining these transmission dynamics.

Tags: monetary policy, emerging markets, state-dependence, transmission, economics

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