The Monetary Transmission Mechanism in the Tropics : A Narrative Approach

Author/Editor: Andrew Berg ; Luisa Charry ; Rafael A Portillo ; Jan Vlcek
Publication Date: September 20, 2013
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: 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.
Series: Working Paper No. 13/197
Subject(s): Monetary transmission mechanism | Kenya | Uganda | Tanzania | Rwanda | Financial sector | Monetary policy | Cross country analysis

Publication Date: September 20, 2013
ISBN/ISSN: 9781484398135/1018-5941 Format: Paper
Stock No: WPIEA2013197 Pages: 54
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