An evaluation of monetary policy in Vietnam, 1998-2016: a SVAR approach
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School of Business |
Bachelor's thesis
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Date
2017
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Mcode
Degree programme
(Mikkeli) Bachelor’s Program in International Business
Language
en
Pages
98
Series
Abstract
Objectives The main objectives of this study were the dynamic relationships of various macroeconomic variables to explore how monetary policy affects output and especially inflation in Vietnam, and suggest some improvements for monetary policy in Vietnam. Summary In 1998-2006, the main contributors of variation are GDP itself and rice shocks but are only GDP shocks in 2007-2016. Main drivers of inflation during 1998-2006 are its own innovations and shocks from external factors. Nevertheless, in the following period, they are its own shocks and shocks from oil price and domestic credit aggregate. Credit channel is found to have an important role in monetary transmission mechanism, while interest rate might not be the main instrument of the central bank to control inflation. Conclusions The empirical results and economic conditions in Vietnam suggest that the central bank should try to improve the channels for monetary transmission with the focus on the interest rate channel. Moreover, it should take into consideration the movements of foreign variables and implement the appropriate policy to counter the effects of these variables.Description
Thesis advisor
Ghosal, AnimeshKeywords
monetary policy, inflation, SVAR, Vietnam, economic growth