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How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices

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  • Asongu Simplice

    ()
    (Yaoundé/Cameroun)

Abstract

We analyze the effects of monetary policy on economic activity in the proposed African monetary unions. Findings broadly show that: (1) but for financial efficiency in the EAMZ, monetary policy variables affect output neither in the short-run nor in the long-term and; (2) with the exception of financial size that impacts inflation in the EAMZ in the short-term, monetary policy variables generally have no effect on prices in the short-run. The WAMZ may not use policy instruments to offset adverse shocks to output by pursuing either an expansionary or a contractionary policy, while the EAMZ can do with the ‘financial allocation efficiency’ instrument. Policy implications are discussed.

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File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/How-would-monetary-policy-matter-in-the-proposed-African-monetary-unions.pdf
File Function: Revised version, 2013
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Paper provided by African Governance and Development Institute. in its series Working Papers with number 13/013.

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Length: 33
Date of creation: 14 Jan 2013
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Handle: RePEc:agd:wpaper:13/013

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Keywords: Monetary Policy; Banking; Inflation; Output effects; Africa;

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