European Parliament Library

Monetary Transmission Mechanism in the East African Community :, An Empirical Investigation, Hamid Davoodi, S. V. S. Dixit, Gabor Pinter

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
Table Of Contents
Cover; Contents; I. Introduction; II. Conduct of Monetary Policy in the EAC; A. Instruments, Targets, and Goals; B. Monetary Policy Framework; Figures; 1. Monetary Policy: Instruments, Targets and Goals; 2. Inside the Black Box of the Monetary Transmission Mechanism; C. Stability of Money Multiplier and Velocity; 3. Velocity and Money Multiplier in the EAC; Tables; 1. Decomposition of the Money Multiplier and Velocity in the EAC; III. Channels of Monetary Transmission Mechanism; A. Money Channel; B. Interest Rate Channel; C. Exchange Rate Channel; D. Credit Channel; E. Asset Price Channel
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (60 p.)
Specific Material Designation
Form Of Item

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