Monetary Transmission Mechanism in the East African Community: An Empirical Investigation

Davoodi, H R and Dixit, S and Pinter, G (2013) Monetary Transmission Mechanism in the East African Community: An Empirical Investigation. Working Paper. SSRN.

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Abstract

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.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Dixit, S
UNSPECIFIED
Item Type: Monograph (Working Paper)
Additional Information: The research paper was published by the author with the affiliation of University of Minnesotta.
Uncontrolled Keywords: Monetary policy, reserve money, policy rate, vector autoregressions
Subjects: Marketing
Depositing User: Veeramani R
Date Deposited: 14 May 2019 13:37
Last Modified: 14 May 2019 13:37
URI: http://eprints.exchange.isb.edu/id/eprint/953
Publisher URL: https://ssrn.com/abstract=2222503
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