Template-Type: ReDIF-Paper 1.0
Author-Name:Drobyshevsky Sergey
Author-Name-First: Sergey 
Author-Name-Last:Drobyshevsky 
Author-Workplace-Name: Gaidar Institute for Economic Policy 
Author-Name:Bozhechkova Alexandra
Author-Name-First: Alexandra 
Author-Name-Last:Bozhechkova 
Author-Workplace-Name: Gaidar Institute for Economic Policy 
Author-Name:Trunin Pavel
Author-Name-First: Pavel 
Author-Name-Last:Trunin 
Author-Workplace-Name: Gaidar Institute for Economic Policy 
Author-Name:Sinelnikova-Muryleva Elena
Author-Name-First: Elena 
Author-Name-Last:Sinelnikova-Muryleva 
Author-Workplace-Name: Gaidar Institute for Economic Policy 
Title: The Effect of Interest Rates on Economic Growth
Abstract: This paper explores the mechanisms, direction and extent to which interest rates can affect economic growth. The authors analyze theoretical concepts and international economic practices in high-interest-rate environments to justify that high nominal and real interest rates may not dampen economic growth if there are mechanisms such as low inflation expectations, economy’s attractiveness to foreign investors, the technological transfer effect, the accumulation of domestic savings. By using a structural vector autoregression (VAR) to evaluate econometrically the effectiveness of the interest rate channel of Bank of Russia’s monetary policy transmission mechanism, the paper provides evidence to suggest that interest rate policy is partially efficient after the global financial crisis.
Classification-JEL: E20, E31, E52, E58, G15
Keywords:  monetary policy, inflation, inflation expectations, nominal interest rate, real interest rate, economic growth, interest rate channel, SVAR model
Creation-Date: 2017
Revision-Date:2017
Length: 24 pages
File-URL: https://www.iep.ru/files/RePEc/gai/wpaper/wpaper-2017-300.pdf
File-Format: application/pdf
File-Function: Revised version, 2017
Handle: RePEc:gai:wpaper:wpaper-2017-300