On The Design And Effects Of Monetary Policy In The Middle East
AbstractIn trying to evaluate the autonomy of central banks in the Middle East, the paper examines the determinants and implications of monetary policy across a sample of countries in the region: Algeria, Egypt, Jordan, Kuwait, Morocco, Saudi Arabia, Syria and Tunisia. Monetary policy is often established as a tool to facilitate government objectives. However, some of the announced objectives – price stability, economic growth, and full employment – may be contradictory. The governments may then set the reaction function for the monetary authority to devote more attention to specific objectives that they judge to be more urgent for economic performance. Models that attempt to identify the reaction function for the monetary authority differentiate between two types of policies: rules or accommodative policies versus discretion or stabilizing policies. An accommodative policy provides a regular supply of credit to an expanding economy. A stabilizing policy, in contrast, varies the money supply to counter shocks that may deviate the economy from its objectives. The present paper seeks to shed some light on the design of monetary policy across countries that have kept a sufficient data record for empirical investigation. The empirical investigation proceeds in two steps. The first step seeks to identify the reaction function for the design of monetary policy. The second step seeks to evaluate the varying effects of monetary policy in the light of variations in the policy design. Specifically, empirical models are estimated to identify the effects of growth in money supply on real output growth and price inflation.
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Bibliographic InfoArticle provided by IIUM Journal of Economis and Management in its journal IIUM Journal of Economics and Management.
Volume (Year): 9 (2001)
Issue (Month): 1 (June)
Monetary policy; Economic growth; Middle-East countries;
Find related papers by JEL classification:
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- W. Lee Hoskins, 1993. "Rethinking the Framework for Monetary Policy," Cato Journal, Cato Journal, Cato Institute, vol. 13(2), pages 171-200, Winter.
- Porter, Richard C. & Ranney, Susan I., 1982. "An eclectic model of recent LDC macroeconomic policy analyses," World Development, Elsevier, vol. 10(9), pages 751-765, September.
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