Interest channel in transmission of monetary policy in Vietnam

Abstract

Interest is one of the instruments for implementing monetary policy that central banks of countries in the world as well as Vietnam have used to regulate monetary circulation with the aim of stabilizing inflation and Like economic growth. Monetary policy execution tools, including interest rate instruments, are quite flexible. This article uses the SVar model to study the level of transmission of interest rates to the price factors in Vietnam's economy from 2005 to 2013. The results show that there is a long-run relationship between interest rates through Co-link test Between interest rates and economic variables, the author only finds a one-way causal relationship from the CPI to interest. With the results of the shock response test and the variance of the variance, the author seeks for the events affected by the interest rate shock, however, only the M2 money supply and the VNI stock price index are impacted. For 4 periods.