Searching for the Relative Potency of Monetary and Fiscal Policies in Selected African Countries: A Panel Data Approach to St. Louis Equation
AbstractWith the aid of the St. Louis equation, this study applies panel data technique to real variables of some selected African countries with extended data from 1970 – 2012. The outcomes support both Keynesian and monetarist positive policy assertions. The monetary base and government expenditure are viable instruments to stabilize output. The study, as well, finds that utilizing the monetary base as a policy tool is more potent than using government expenditure. This is in line with the predictions of Milton Friedman and Schwartz (1963) and other advocates of the St. Louis equation. Therefore, in order to attain higher output growth, these economies should rely more on monetary policy as compared with fiscal policy.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 52420.
Date of creation: 22 Dec 2013
Date of revision:
Monetary Policy; Fiscal Policy; St. Louis Equation and Panel Data;
Find related papers by JEL classification:
- C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
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