Do Monetary Policy Outcomes Promote Stability in Fragile Settings?
IMF Working Papers, May 20, 2022
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- Do Monetary Policy Outcomes Promote Stability in Fragile Settings?
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Bibliographic details
- Authors: Oumar Diallo, Steve Loris Gui-Diby, Patrick A. Imam
- Published: May 20, 2022
- Series: IMF Working Papers
Main findings
- The combination of reduction of inflation and lower unemployment delivers the highest payoff in terms of promoting peace and cohesion.
- Low inflation is identified as the primary desired monetary policy outcome for reducing fragility.
- Low unemployment rate is identified as a secondary desired monetary policy outcome for reducing fragility.
- Results broadly confirm the above “winning” combination even when setting aside challenges of monetary policy transmission.
- A series of robustness tests confirm the core findings.
Scope and approach
- The paper examines the universe of the most prominent combinations of pursued monetary policy objectives across fragile settings.
- It assesses relationships between monetary policy outcomes and fragility, focusing on how different outcome combinations affect peace and cohesion.
Policy implications and interpretation
- Paying attention to monetary policy outcomes is important in the context of reducing fragility.
- Policymakers in fragile settings should prioritize achieving low inflation, with low unemployment as a complementary objective, to maximize gains in peace and social cohesion.
- Consideration of monetary policy transmission challenges is necessary, but the outcome-focused results remain robust.
Publication and metadata
- Authors: Oumar Diallo, Steve Loris Gui-Diby, Patrick A. Imam
- Publication date: May 20, 2022
- Series: Working Paper No. 2022/096
- Volume: 2022
- Issue: 096
- Pages: 55
- ISBN: 9798400211058
- ISSN: 1018-5941
- Subjects: Exchange rates, Foreign exchange, Inflation, Labor, Monetary policy, Monetary policy frameworks, Price stabilization, Prices, Unemployment rate
- Keywords: Exchange rates, Fragile settings, Fragility, Global, Inflation, monetary policy, Monetary policy frameworks, monetary policy outcome, monetary policy transmission, objectives, outcome variable, Price stabilization, pursued monetary policy objective, Unemployment rate
Oumar Diallo, Steve Loris Gui-Diby, and Patrick A. Imam, "Do Monetary Policy Outcomes Promote Stability in Fragile Settings?", IMF Working Papers 2022, 096 (2022), May 20, 2022.
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