The cross-industry effects of monetary policy: New evidence from Bangladesh

This paper investigates the effects of monetary policy on the industry-level manufacturing output in Bangladesh, a developing country experiencing rapid economic growth over the last three decades. The analysis contributes to the literature by focusing on policy transmission employing detailed industry-level data from a developing economy. The fully flexible and theoretically consistent structural vector autoregression approach is used to disentangle the monetary policy transmission. Our investigation reveals heterogeneous sectoral responses which are systematically related to the size, age, ownership, types of goods produced, and financing requirements of firms operating in a particular sector. The results remain robust with a host of alternative modelling specifications. The findings would shed light on monetary policy transmissions in similar other developing economies.

Automated summary

This paper investigates the effects of monetary policy on industry-level manufacturing output in Bangladesh and contributes to the literature by analyzing policy transmission using detailed industry-level data. The findings reveal sector-specific responses related to firm characteristics in terms of size, age, ownership, goods produced, and financing requirements. The results remain robust across alternative modeling specifications, providing insights into monetary policy transmission in other developing economies.