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A VAR Analysis of Kenya's Monetary Policy Transmission Mechanism: How Does the Central Bank's REPO Rate Affect the Economy?

A VAR Analysis of Kenya's Monetary Policy Transmission Mechanism: How Does the Central Bank's REPO Rate Affect the Economy?
Author: Kevin C. Cheng
Publisher: International Monetary Fund
Total Pages: 30
Release: 2006-12
Genre: Business & Economics
ISBN:

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This paper examines the impact of a monetary policy shock on output, prices, and the nominal effective exchange rate for Kenya using data during 1997–2005. Based on techniques commonly used in the vector autoregression literature, the main results suggest that an exogenous increase in the short-term interest rate tends to be followed by a decline in prices and appreciation in the nominal exchange rate, but has insignificant impact on output. Moreover, the paper finds that variations in the short-term interest rate account for significant fluctuations in the nominal exchange rate and prices, while accounting little for output fluctuations.


Monetary Policy Transmission in Mauritius Using a VAR Analysis

Monetary Policy Transmission in Mauritius Using a VAR Analysis
Author: Mr.Charalambos G. Tsangarides
Publisher: International Monetary Fund
Total Pages: 35
Release: 2010-02-01
Genre: Business & Economics
ISBN: 1451962789

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Applying commonly used vector autoregression (VAR) techniques, this paper investigates the transmission mechanism of monetary policy on output and prices for Mauritius, using data for 1999-2009. The results show that (i) an unexpected monetary policy tightening-an increase in the Bank of Mauritius policy interest rate-leads to a decline in prices and output but the effect on output is weaker; (ii) an unexpected decrease in the money supply or an unexpected increase in the nominal effective exchange rate result in a decrease in prices; and (iii) variations of the policy variables account for small a percentage of the fluctuations in output and prices. Taken together, these results suggest a rather weak monetary policy transmission mechanism. Finally, we find some differences in the transmission mechanism depending on whether core or headline consumer price index is used in the estimations.


Monetary Transmission Mechanism in the East African Community

Monetary Transmission Mechanism in the East African Community
Author: Mr.Hamid Reza Davoodi
Publisher: International Monetary Fund
Total Pages: 59
Release: 2013-02-06
Genre: Business & Economics
ISBN: 1475553498

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Do changes in monetary policy affect inflation and output in the East African Community (EAC)? We find that (i) Monetary Transmission Mechanism (MTM) tends to be generally weak when using standard statistical inferences, but somewhat strong when using non-standard inference methods; (ii) when MTM is present, the precise transmission channels and their importance differ across countries; and (iii) reserve money and the policy rate, two frequently used instruments of monetary policy, sometimes move in directions that exert offsetting expansionary and contractionary effects on inflation—posing challenges to harmonization of monetary policies across the EAC and transition to a future East African Monetary Union. The paper offers some suggestions for strengthening the MTM in the EAC.


Monetary Policy Statement

Monetary Policy Statement
Author: Central Bank of Kenya
Publisher:
Total Pages: 40
Release: 2010-12
Genre: Kenya
ISBN:

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Monetary Transmission in Low Income Countries

Monetary Transmission in Low Income Countries
Author: Ms.Prachi Mishra
Publisher: International Monetary Fund
Total Pages: 44
Release: 2010-10-01
Genre: Business & Economics
ISBN: 1455208884

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This paper reviews monetary transmission mechanisms in low-income countries (LICs) to identify aspects of the channels that may operate differently in LICs relative to advanced and emerging economies. Given the weak institutional frameworks, reduced role of securities markets, imperfect competition in the banking sector and the resulting high cost of bank lending to private firms, the traditional channels (interest rate, bank lending, and asset price) are impaired in LICs. The exchange rate channel is also undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature.


Monetary and Financial Systems in Africa

Monetary and Financial Systems in Africa
Author: Aloysius Ajab Amin
Publisher: Springer Nature
Total Pages: 449
Release: 2022-05-26
Genre: Business & Economics
ISBN: 3030962253

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This book provides an overview of the monetary and financial systems seen in Africa. The issues related to these systems are examined to help evaluate their effectiveness in fostering the development of African economies. Economic integration is extensively discussed to highlight variations between different parts of Africa and the specific challenges seen within certain regions. The impact of monetary unions, in particular the CFA franc zone, on economic activities is also explored. This book aims to outline how sustainable development can be achieved in Africa through well-developed financial and monetary institutions and policies. It will be relevant to students, academics and policy makers interested in African and development economics.


The Quest for Regional Integration in the East African Community

The Quest for Regional Integration in the East African Community
Author: Mr.Paulo Drummond
Publisher: International Monetary Fund
Total Pages: 308
Release: 2015-01-12
Genre: Business & Economics
ISBN: 1484364414

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The countries in the East African Community (EAC) are among the fastest growing economies in sub-Saharan Africa. The EAC countries are making significant progress toward financial integration, including harmonization of supervisory arrangements and practices and the modernization of monetary policy frameworks. This book focuses on regional integration in the EAC and argues that the establishment of a time table for the eliminating the sensitive-products list and establishing a supranational legal framework for resolving trade disputes are important reforms that should foster regional integration.


How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence

How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence
Author: Ms.Prachi Mishra
Publisher: International Monetary Fund
Total Pages: 91
Release: 2012-06-01
Genre: Business & Economics
ISBN: 1475543808

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This paper surveys the evidence on the effectiveness of monetary transmission in low-income countries. It is hard to come away from this review with much confidence in the strength of monetary transmission in such countries. We distinguish between the "facts on the ground" and "methodological deficiencies" interpretations of the absence of evidence for strong monetary transmission. We suspect that "facts on the ground" are an important part of the story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.


The Oxford Handbook of the Economy of Cameroon

The Oxford Handbook of the Economy of Cameroon
Author: Célestin Monga
Publisher: Oxford University Press
Total Pages: 801
Release: 2022-12-20
Genre: Business & Economics
ISBN: 0192664654

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Cameroon's suboptimal economic experience since independence (1960) sheds light on broader issues of Africa's development narrative, and provides valuable economic and policy knowledge. While Cameroon's large informal economy is diverse and resilient and rooted in old business traditions, its formal economy has exhibited low productivity and employment growth for over 60 years. This has brought anger, disappointment, and violent conflict in several regions of the country. The Oxford Handbook of the Economy of Cameroon examines the reasons of Cameroon's unsatisfactory economic performance and draws lessons from successful development experience to help tackle these issues. The Handbook provides a critical assessment of the history, patterns, and strategies of economic development in Cameroon, and outlines new approaches to economic enquiry for prosperity and social change. Through Cameroon's governance story, the handbook analyzes the evolving conceptions of economic policy, takes stock of intellectual progress, documents the challenges of implementation, and outlines the intellectual and policy agenda ahead. For a developing country increases in per capita income arise from advances in technology arise from closing the knowledge and technology gap with those at the frontier. And within any country (especially one like Cameroon), there is enormous scope for productivity improvement simply by closing the gap between best practices and average practices. Standards of living can therefore be improved through the implementation of pertinent learning strategies. In this Oxford Handbook of the Economy of Cameroon, an international team of leading development economists and researchers address the wide range of issues facing Cameroon and provide guiding principles on how best the country (and other developing nations) could move human, capital, and financial resources from low- to high-productivity sectors in a constantly changing global economy.