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The Monetary Transmission Mechanism in the Tropics: A Narrative Approach
Author:
Mr. Andrew Berg
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,
Ms. Luisa Charry
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,
Mr. Rafael A Portillo
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Mr. Jan Vlcek
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Series:
IMF Working Papers
Volume/Issue:
Volume 2013: Issue 197
Language:
English
Publication Date:
20 Sep 2013
DOI:
https://doi.org/10.5089/9781484398135.001
ISBN:
9781484398135
ISSN:
1018-5941
Pages:
54
Keywords:
WP; exchange rate; Kenya; central bank; rate; Uganda; Monetary Transmission Mechanisms; Low Income Countries; core inflation; nominal exchange rate; policy regime; headline inflation; interest rate transmission mechanism; economic structure; excess reserves; interest rate channel; exchange rate pressure; exchange rate channel; monetary policy response; Exchange rates; Inflation; Short term interest rates; Central bank policy rate; Exchange rate arrangements; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Many central banks in low-income countries in Sub-Saharan Africa are modernising their monetary policy frameworks. Standard statistical procedures have had limited success in identifying the channels of monetary transmission in such countries. Here we take a narrative approach, following Romer and Romer (1989), and center on a significant tightening of monetary policy that took place in 2011 in four members of the East African Community: Kenya, Uganda, Tanzania and Rwanda. We find clear evidence of the transmission mechanism in most of the countries, and argue that deviations can be explained by differences in the policy regime in place.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund