n African Finance Journal - How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices
|Article Title||How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices|
|© Publisher:||AfricaGrowth Institute|
|Journal||African Finance Journal|
|Affiliations||1 African Governance and Development Institute|
|Publication Date||Jan 2014|
|Pages||34 - 63|
|Keyword(s)||Africa, Banking, E51, E52, E58, E59, Inflation, Monetary policy, O55 and Output effects|
We analyze the effects of monetary policy on economic activity in the proposed African monetary unions. Findings broadly show that: (1) but for financial efficiency in the EAMZ, monetary policy variables affect output neither in the short-run nor in the long-term and; (2) with the exception of financial size that impacts inflation in the EAMZ in the short-term, monetary policy variables generally have no effect on prices in the short-run. The WAMZ may not use policy instruments to offset adverse shocks to output by pursuing either an expansionary or a contractionary policy, while the EAMZ can do with the 'financial allocation efficiency' instrument. Policy implications are discussed.
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