Monetary policy transmission in Vietnam: evidence from Avar approach

Abstract

A thorough understanding of the transmission mechanism is a key requirement for central banks for successful implementation of monetary policy. This paper investigates the existence of the interest rate channel, exchange rate channel and asset price channel in Vietnam by employing a vector autoregressive model analysis using monthly data ranging from 2003M1 to 2012M12. The results from the analysis present evidence for a cost channel. However, we ï¬ nd no evidence for the existence of an exchange rate channel or asset price channel of monetary transmission in Vietnam