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COVID-19 uncertainty and monetary policy

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  • Christian Pinshi

    (UNIKIN - University of Kinshasa)

Abstract

The uncertainty of COVID-19 seriously disrupts the Congolese economy through various macroeconomic channels. This pandemic is influencing the management of monetary policy in its role as regulator of aggregate demand and guarantor of macroeconomic stability. We use a Bayesian VAR framework (BVAR) to provide an analysis of the COVID uncertainty shock on the economy and the monetary policy response. The analysis shows important conclusions. The uncertainty effect of COVID-19 hits unprecedented aggregate demand and the economy. In addition, it undermines the action of monetary policy to soften this fall in aggregate demand and curb inflation impacted by the exchange rate effect. We suggest a development of unconventional devices for a gradual recovery of the economy. Jels code: C32, E32, E51, E52, E58

Suggested Citation

  • Christian Pinshi, 2020. "COVID-19 uncertainty and monetary policy," Working Papers hal-02566796, HAL.
    • Handle: RePEc:hal:wpaper:hal-02566796
    Note: View the original document on HAL open archive server: https://hal.science/hal-02566796
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    References listed on IDEAS

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    Cited by:

    1. Sinem Koçak & Özge Barış-Tüzemen, 2022. "Impact of the COVID-19 on foreign direct investment inflows in emerging economies: evidence from panel quantile regression," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
    2. Trung Duc Nguyen & Anh Hoang Le & Eleftherios I. Thalassinos & Lanh Kim Trieu, 2022. "The Impact of the COVID-19 Pandemic on Economic Growth and Monetary Policy: An Analysis from the DSGE Model in Vietnam," Economies, MDPI, vol. 10(7), pages 1-19, July.
    3. Christian Pinshi, 2020. "Arithmétique du Pass-through de la COVID-19 sur le Système financier Congolais," Working Papers hal-02897385, HAL.
    4. Ben salem, salha & slama, ines, 2021. "Modeling the impact of Coronavirus uncertainty on bank system vulnerability and monetary policy conduct," MPRA Paper 107391, University Library of Munich, Germany.
    5. Sadananda Prusty & Anubha & Saurabh Gupta, 2021. "On the Road to Recovery: The Role of Post-Lockdown Stimulus Package," FIIB Business Review, , vol. 11(2), pages 206-224, June.
    6. PINSHI, Christian P., 2020. "Snapshot de l’incidence de l’épidémie de coronavirus en Afrique [Snapshot of the incidence of the coronavirus epidemic in Africa]," MPRA Paper 102492, University Library of Munich, Germany, revised Aug 2020.
    7. PINSHI, Christian P., 2022. "A Note on the Natural Rate of Dollarization: Mathematical Approximation of Limits," MPRA Paper 111671, University Library of Munich, Germany.
    8. PINSHI, Christian P., 2023. "Claims, Deposits and Financial Conditions in DR Congo: Impact of COVID-19 on the Financial System," MPRA Paper 117381, University Library of Munich, Germany.
    9. Linh Tu Ho & Christopher Gan, 2021. "Foreign Direct Investment and World Pandemic Uncertainty Index: Do Health Pandemics Matter?," JRFM, MDPI, vol. 14(3), pages 1-15, March.
    10. Demiessie, Habtamu, 2020. "COVID-19 Pandemic Uncertainty Shock Impact on Macroeconomic Stability in Ethiopia," MPRA Paper 102625, University Library of Munich, Germany, revised 31 Aug 2020.
    11. Deimantė Teresienė & Greta Keliuotytė-Staniulėnienė & Rasa Kanapickienė, 2021. "Sustainable Economic Growth Support through Credit Transmission Channel and Financial Stability: In the Context of the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(5), pages 1-34, March.

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    More about this item

    Keywords

    Uncertainty; COVID-19; Monetary policy; Bayesian VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • 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

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