Monetary Policy Efficiency in the Economies of Central Asia

This study examines monetary policy efficiency in Central Asia by investigating the monetary transmission mechanism in the region’s economies. To examine monetary policy efficiency, it is necessary to take into account factors that might impede the transmission, such as high levels of dollarization, weak financial sectors, underdeveloped capital markets, and low monetization of economies. Empirical findings confirm the importance of exchange rate pass-through in transition economies with high dollarization. The findings also provide an empirical case for deepening the local financial sectors to improve the efficiency of monetary policy and to improve resilience to external and other shocks.