Differential Effectiveness of Monetary Transmission Channels in Peru's Economic Growth, 2000-2022

Abstract

This study aimed to examine the relative effectiveness of the interest rate and exchange rate transmission channels of monetary policy on Peru's economic growth during the 2000–2022 period. A quantitative, longitudinal research design was employed using quarterly data from the Central Reserve Bank of Peru and the National Institute of Statistics and Informatics. Stationarity was assessed using the Augmented Dickey-Fuller (ADF) unit root test, and robust NeweyWest standard errors were applied. The interbank interest rate exerted a statistically significant effect on GDP growth beginning in the second quarter, whereas the exchange rate exhibited only indirect effects through the Central Reserve Bank of Peru's monetary liabilities. The analysis also showed that monetary policy shocks provided significant predictive information for economic growth over a four-quarter horizon. The findings indicate that the interest rate channel was more effective than the exchange rate channel in stabilizing Peru's real economic activity in the short and medium term, reinforcing the central role of the interbank interest rate channel within the Central Reserve Bank of Peru's inflation-targeting framework.