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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 A

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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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 48496.

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Date of creation: 14 Jan 2013
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Handle: RePEc:pra:mprapa:48496

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

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