scholarly journals Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Sub-Saharan Africa

2015 ◽  
Vol 53 (4) ◽  
pp. 237-271
Author(s):  
Fadia Al Hajj ◽  
Gilles Dufrénot ◽  
Kimiko Sugimoto ◽  
Romain Wolf
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Sub Saharan Africa ◽  
Currency Board ◽  
Policy Regimes ◽  
Sub Saharan

Monetary Policy in Sub-Saharan Africa

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Low Income ◽  
Sub Saharan Africa ◽  
Low Income Countries ◽  
African Countries ◽  
Policy Regimes ◽  
Export Prices ◽  
Policy Work ◽  
Sub Saharan ◽  
Policy Guidance

Having broadly stabilized inflation over the past two decades, many policymakers in sub-Saharan Africa are now asking more of their monetary policy frameworks. They are looking to avoid policy misalignments and respond appropriately to both domestic and external shocks, including swings in fiscal policy and spikes in food and export prices. In many cases they are finding current regimes—often characterized as ‘money targeting’—lacking, with opaque and sometimes inconsistent objectives, inadequate transmission of policy to the economy, and difficulties in responding to supply shocks. At the same time, little existing research on monetary policy is targeted to low-income countries. What do we know about the empirics of monetary transmission in low-income countries? (How) Does monetary policy work in countries characterized by a huge share of food in consumption, underdeveloped financial markets, and opaque policy regimes? (How) Can we use methods largely derived in advanced countries to answer these questions? And (how) can we use the results to guide policymakers? This book draws on years of research and practice at the IMF and in central banks from the region to shed empirical and theoretical light on these questions and to provide practical tools and policy guidance. A key feature of the book is the application of dynamic general equilibrium models, suitably adapted to reflect key features of low-income countries, for the analysis of monetary policy in sub-Saharan African countries.

Monetary Policy in Sub-Saharan Africa

2018 ◽  
Author(s):  
Andrew Berg ◽  
Rafael Portillo
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Sub Saharan Africa ◽  
Policy Regimes ◽  
The Past ◽  
Supply Shocks ◽  
Overall Stability ◽  
Great Progress ◽  
Sub Saharan ◽  
Nominal Anchor

Most countries in sub-Saharan Africa have made great progress in stabilizing inflation over the past two decades. In about half, a hard peg provides the nominal anchor. In the rest, which are the focus of this book, policymakers have more recently been asking more of monetary policy—to avoid policy misalignments and respond appropriately to shocks such as export and food price spikes and swings in fiscal policy—in support of overall stability and growth. And they are, in many cases, finding current regimes lacking, with opaque and sometimes inconsistent objectives, inadequate transmission of policy to the economy, and difficulties in responding to supply shocks. This chapter reviews this history and the analytic and policy challenges of modernizing monetary policy regimes in the region. Drawing on the results from the rest of this book, it charts a way forward.

SWITCHING TO GOOD POLICY? THE CASE OF CENTRAL AND EASTERN EUROPEAN INFLATION TARGETERS

2019 ◽  
Vol 24 (8) ◽  
pp. 2104-2128
Author(s):  
Andrej Drygalla
Keyword(s):  
Monetary Policy ◽  
Czech Republic ◽  
Inflation Targeting ◽  
Dynamics Simulation ◽  
Output Volatility ◽  
The Czech Republic ◽  
Policy Regimes ◽  
Switching Dynamic ◽  
Dynamic Stochastic ◽  
Good Policy

The paper analyzes how actual monetary policy changed following the official adoption of inflation targeting in the Czech Republic, Hungary, and Poland and how it affected the volatilities of important macroeconomic variables in the years thereafter. To disentangle the effects of the policy shift from exogenous changes in the volatilities of these variables, a Markov-switching dynamic stochastic general equilibrium model is estimated that allows for regime switches in the policy parameters and the volatilities of shocks hitting the economies. Whereas estimation results reveal periods of high and low volatility for all three economies, the presence of different policy regimes is supported by the underlying data for the Czech Republic and Poland, only. In both economies, monetary policy switched from weak and unsystematic to strong and systematic responses to inflation dynamics. Simulation results suggest that the policy shifts of both central banks successfully reduced inflation volatility in the following years. The observed reduction in output volatility, on the other hand, is attributed more to a reduction in the size of external shocks.

Post-crisis Monetary Policy Frameworks in sub-Saharan Africa

2011 ◽  
Vol 23 (2) ◽  
pp. 190-201 ◽  
Author(s):  
Louis Kasekende ◽  
Martin Brownbridge
Keyword(s):  
Monetary Policy ◽  
Sub Saharan Africa ◽  
Policy Frameworks ◽  
Sub Saharan

An Evaluation of Monetary Targeting Regimes

2000 ◽  
Vol 174 ◽  
pp. 105-113 ◽  
Author(s):  
Ray Barrell ◽  
Karen Dury
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Price Level ◽  
Policy Framework ◽  
Policy Regime ◽  
Feedback Mechanisms ◽  
Policy Regimes ◽  
Monetary Targeting ◽  
Over Time ◽  
Monetary Policy Framework

The policy regime in Europe has put the economy on ‘auto-pilot’. We investigate different designs for the required feedback mechanisms. The uncertainty facing an economy depends on the pattern of shocks it faces, the response of the private sector to those shocks and also the policy reactions of the authorities. Two ‘ideal type’ policy regimes are investigated, and inflation targeting is compared to nominal aggregate targeting. In general it is suggested that targeting a nominal aggregate reduces the variability of the price level, and stabilises the price level more quickly over time. Inflation outcomes are also less variable for the Euro Area, and they are less asymmetric when a nominal aggregate is targeted. The new European fiscal framework requires that countries set deficit targets close to balance. We show that there is plenty of space for automatic stabilisers to work, but the room available depends in part on the monetary policy framework chosen.

scholarly journals DOES FINANCIAL DEVELOPMENT EXPLAIN THE CYCLICALITY OF MONETARY POLICY IN SUB-SAHARAN AFRICA?

2018 ◽  
Vol 43 (4) ◽  
pp. 71-83
Author(s):  
ITCHOKO MOTANDE MONDJELI MWA NDJOKOU ◽  
CHRISTOPHE MARTIAL MBASSI
Keyword(s):  
Monetary Policy ◽  
Financial Development ◽  
Sub Saharan Africa ◽  
Sub Saharan
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