Uncertainty and Monetary Policy

Since the global financial crisis, there has been a growing interest in whether the effectiveness of monetary policies depends on uncertainty. This study analyzes if transmission effects of them depend on the level of uncertainty. The analysis covers the period from May 1999 to December 2022 and employs the local projection model of Jordà to measure the transmission effects. According to the empirical analysis, expansionary monetary policies could increase housing sales and jeonse prices and the size of the transmission effects shows heterogeneity by different housing types. The analysis for the asymmetry of the policies with respect to uncertainty reveals that they may have higher effectiveness in affecting the housing market during periods of lower uncertainty. Robustness analysis was conducted to ensure the validity of the results and the main findings were robust. The results of this study suggest that in order to enhance the effectiveness of monetary policies during periods of high uncertainty it is necessary to consider additional measures.