Measuring and Mending Monetary Policy Effectiveness Under Capital Account Restrictions: Lessons from Mauritania
IMF Working Papers, March 27, 2013
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Bibliographic details
- Authors: Robert Blotevogel
- Published: March 27, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484328682.001
Identification approach and institutional mechanism
- Proposes a new approach to identifying exogenous monetary policy shocks in low-income countries with capital account restrictions.
- Identifies a domestic repatriation requirement in Mauritania as the key institutional characteristic that allows establishment of exogeneity.
Data and empirical methods
- Uses a unique bank-level dataset on monthly balance sheets of six Mauritanian banks over the period 2006–11.
- Empirical methods:
- Structural vector autoregressions.
- Two-stage least square panel models.
Main empirical findings
- Unlike in advanced countries, finds no evidence for a statistically significant impact of exogenous monetary policy shocks on bank lending.
- Demonstrates the ineffectiveness of monetary policy in the Mauritanian context using the specified dataset and methods.
Policy recommendations and channels to improve effectiveness
- Reduction in banks’ loan concentration ratios to broaden credit distribution and reduce impediments to transmission.
- Improvements in the liquidity management framework to enhance banks’ responsiveness to monetary stimuli.
- Implicitly highlights the importance of banks’ liquidity position, excess reserves, refinancing possibility, and risk management capability for effective monetary transmission.
Key publication metadata and descriptors
- Author: Robert Blotevogel
- Date: March 27, 2013
- Pages: 35
- Volume: 2013
- Issue: 077
- Series: Working Paper No. 2013/077
- DOI: https://doi.org/10.5089/9781484328682.001
- ISBN: 9781484328682
- ISSN: 1018-5941
- Subject and keywords include: Agroindustries, Bank credit, Banking, Credit, Economic sectors, Exports, Financial institutions, International trade, Loans, Money; and terms such as balance sheet equity, bank reserves, capital account restrictions, central bank, excess reserves, exogenous monetary policy shocks, liquidity management, loan concentration, loan portfolio, low-income countries, monetary policy effectiveness, monetary policy shock, private-sector credit, refinancing possibility, risk management capability, transmission mechanism.
IMF Working Paper — "Measuring and Mending Monetary Policy Effectiveness Under Capital Account Restrictions: Lessons from Mauritania", Robert Blotevogel, March 27, 2013.