Full length articleMeasuring monetary policy with empirically grounded restrictions: An application to Thailand

- This paper studies the effect of monetary policy in Thailand.
- The identifying restrictions are based on empirical evidence.
- Some “stylized” facts on the transmission mechanism need to be revised.
- There is an immediate impact on the price level via the long-term interest rate.

This paper studies the effect of monetary policy in Thailand based on structural vector autoregression (SVAR) model. Unlike all existing studies, this paper (i) properly controls for external factors, (ii) uses the identifying restrictions which are specified and justified from empirical evidence and (iii) studies the immediate as well as the short term effect of monetary policy. I find that several important stylized facts on the transmission mechanism of monetary policy need to be revised.