Author(s): Elisa Ehinmilorin

Abstract: This paper empirically investigates monetary policy transmission channels and manufacturing sector performance in the United States using the Autoregressive Distributed Lag Model. 30 years of World Development Indicators time series data spanning from 1990 to 2020 were utilized despite numerous challenges. In the analysis, there are numerous findings. The results of the unit root test reveal that all transmission channel variables are stationary after the first difference. Consequently, the order series of variables are integrated at I (0) and I (1). This, of course, allowed the study to proceed with the co-integration test using the ARDL Bounds test, which demonstrated a long-term relationship between monetary policy transmission channels and manufacturing sector performance in the United States. Because the variables under consideration are co-integrated, the researchers estimated the long-run test using the ARDL method and the ECM. The baseline result of the ECM model indicates that the money supply and manufacturing sector performance in the United States has a significant positive short-run relationship. In contrast, the other variables utilised in this study have a significant negative short-run relationship. The study suggests that the Federal Reserve of the United States employ an expansionary monetary policy to increase the money supply to the real sectors and improve the performance of the US economy. The Federal Reserve should reduce the MPR to attract low-interest rates that will increase credit and boost productivity across all US industries. Different monetary policy instruments affect industrial outputs in the United States, as demonstrated by the findings. Under guided deregulation, the Federal Reserve should employ a distinct set of monetary policy guidelines for each sector of the United States. The imposition of CRR on financial institutions, particularly Deposit Money Banks, would impede economic growth.

DOI: 10.22271/maths.2022.v7.i4b.855

Pages: 119-127 | Views: 327 | Downloads: 17

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