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Monetary Policy in Sub-Saharan Africa

Online ISBN:
9780191827624
Print ISBN:
9780198785811
Publisher:
Oxford University Press
Book

Monetary Policy in Sub-Saharan Africa

Andrew Berg (ed.),
Andrew Berg
(ed.)

Deputy Director

Deputy Director, Institute for Capacity Development, International Monetary Fund
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Rafael Portillo (ed.)
Rafael Portillo
(ed.)

Deputy Division Chief

Deputy Division Chief, Economic Modelling Division, Research Department, International Monetary Fund
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Published online:
19 April 2018
Published in print:
22 March 2018
Online ISBN:
9780191827624
Print ISBN:
9780198785811
Publisher:
Oxford University Press

Abstract

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.

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