How to order
IMF Publications

Working Papers in full text
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All

Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile

Monetary Policy in Low Income Countries in the Face of the Global Crisis : The Case of Zambia

Author/Editor: Jaromir Benes | Andrew Berg | Rafael Portillo | Mai Dao | Alfredo Baldini
Authorized for Distribution: April 1, 2012
Electronic Access: Free Full Text (PDF file size is 1,604KB)
Use the free Adobe Acrobat Reader to view this PDF file.
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: We develop a DSGE model with a banking sector to analyze the impact of the financial crisis on Zambia and the role of the monetary policy response. We view the crisis as a combination of three related shocks: a worsening in the terms of the trade, an increase in the country’s risk premium, and a decrease in the risk appetite of local banks. We characterize monetary policy as "stop and go": initially tight, subsequently loose. Simulations of the model broadly match the path of the economy during this period. We find that the initial policy response contributed to the domestic impact of the crisis by further tightening financial conditions. We study the factors driving the "stop" part of policy and derive policy implications for central banks in low-income countries.
Order a print copy
Series: Working Paper No. 12/94
Subject(s): Banking sector | Economic models | Low-income developing countries | Monetary policy | Risk premium
Author's keyword(s): Global Financial Crisis | Low-Income Countries | Monetary Policy | Zambia
    Published:   April 1, 2012        
    ISBN/ISSN:   9781475502848/1018-5941   Format:   Paper
    Stock No:   WPIEA2012094   Pages:   47
    Price:   US$18.00
Please address any questions about this title to