Summary of Transmission Troubles

Looking for the article?
We have the summary! Get the key insights in just 5 minutes.

Transmission Troubles summary
Start getting smarter:
or see our plans




  • Analytical
  • Innovative
  • Overview


The central banks of developed economies can affect economic activity through the quality and efficacy of their “transmission mechanisms” that pass interest rate adjustments through to the broader economy. Alas, developing countries have not extracted the same benefits from monetary policies. Economists at the International Monetary Fund contend that the streams of cash coming into developing countries from their diasporas impair the transmission mechanism and render monetary policy ineffective. getAbstract recommends this astute report to officials, economists and executives interested in learning more about the drivers of an effective monetary policy apparatus.

About the Authors

Adolfo Barajas et al. are economists at the International Monetary Fund.



Government monetary actions lead to economic results through a “transmission mechanism” that allows the short-term interest rates set by central banks to affect the cost of credit to domestic consumers and business. But studies have identified the impairment of the transition mechanism in many developing nations. A plausible hypothesis for this defect implicates remittances – the money emigrants send back to their home countries. A 2016 IMF analysis of the experiences of 58 emerging economies over the 1990–2013 period finds that “the direct effect of a [central...

More on this topic

By the same authors

Is There a Remittance Trap?
The Refugee Surge in Europe
Rethinking Financial Deepening
Can Islamic Banking Increase Financial Inclusion?

Customers who read this summary also read

Blockchain Babel
Are Payments Fast Enough Already?
Between Debt and the Devil
Why Is the Fed’s Balance Sheet Still So Big?
Why Does Everyone Hate MMT?
Watch Out World, Here Come Chinese Government Bonds

Related Channels

Comment on this summary