THE MONETARY TRANSMISSION MECHANISM: THE THEORETICAL ASPECT

Abstract

The main task of monetary policy is the implementation of management decisions in the direction of regulating the processes in the financial market and the speed of cash flows with the necessary exchange rate or inflation. At the same time, the indirect goal or main task is sustainable economic growth. Accordingly, the study of the principles of operation, features of the application of certain instruments of monetary policy at different stages of development of the financial system and the state of the real sector of the economy determines the importance of transmission (transmission) mechanism. The practical value of the transmission mechanism lies in the reflection of the relationship between monetary policy pursued by the central bank and economic growth of the state. The aim of the research is to analyze the existing approaches to the essence of monetary policy in particular and the transmission mechanism in order to identify the most effective channels for economic growth under the current conditions of the financial system. Methodology and scientific approaches: methods of systematization, comparison, structural analysis, logical generalization, bibliometric analysis were used (using VOSviewer 1.6.15). The analysis of scientific publications allowed to determine the tools and methods of monetary policy, as well as the main transmission channels and directions of their impact on the economy. The results of the study made it possible to assert the lack of a single effective approach to the implementation of monetary policy that would clearly increase the rate of economic growth. A number of measures depend primarily on the targeting regime chosen by the central bank and the stated principles of monetary policy. With the right tool chosen and the channel of influence determined, the state's economy will respond with positive changes, which will be reflected in increasing GDP, welfare, and as a consequence of increasing domestic consumption and increasing the number of investment processes. Intensive development of the economy with parallel targeting of inflation will create additional jobs, increase wages, which contributes to the accumulation of resources for investment in the real sector of the economy. Further empirical research will determine the most effective channels of the transmission mechanism, taking into account the stage of development and strategy of the state, which will allow it to strengthen its position in the global environment and mitigate the impact of negative factors.