Testing empirically whether the effectiveness of monetary policy has changed is no easy task. It requires well-measured economic data, a sufficiently long sample that can be tested for a change in the relationship, and a sophisticated approach to hold all other influencing factors constant to extract the unique impact of monetary policy.
The export momentum of EMEs weakened at the time of the financial crisis due to sluggish import demand in major countries amid the economic slowdown. In addition, as uncertainty over economic conditions mounted due to the global financial market unrest, the sentiment of economic agents turned sour and, consequently, consumption and investment also weakened.