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Monetary Policy In Rwanda: A Cointegration Analysis

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  • Aüssi Sayinzoga
  • Richard Simson

Abstract

Countries in Africa are increasingly becoming similar in outlook, especially as regards monetary policy. With a view to conducting a long‐term study of monetary policy in Africa, we apply an empirical test for the coherence of inflation targeting, first conducted by Nell (2003) for South Africa, to data from Rwanda. We find that like South Africa, Rwanda has a stable money demand function and the adoption of an inflation target is a wise policy option. Also, the Rwandan money market needs just over five quarters to eliminate half of any monetary disequilibrium. These results are of some interest to economists and policy makers for all the countries in the increasingly interconnected continent of Africa.

Suggested Citation

  • Aüssi Sayinzoga & Richard Simson, 2006. "Monetary Policy In Rwanda: A Cointegration Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 74(1), pages 65-78, March.
    • Handle: RePEc:bla:sajeco:v:74:y:2006:i:1:p:65-78
    DOI: 10.1111/j.1813-6982.2006.00049.x
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    References listed on IDEAS

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    1. Mr. Subramanian S Sriram, 1999. "Survey of Literature on Demand for Money: Theoretical and Empirical Work with Special Reference to Error-Correction Models," IMF Working Papers 1999/064, International Monetary Fund.
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    Cited by:

    1. Jean-François Goux & Thomas Rusuhuzwa Kigabo, 2007. "Rupture structurelle et demande de monnaie au Rwanda," Working Papers 0727, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Mr. Hamid R Davoodi & S. V. S. Dixit & Gabor Pinter, 2013. "Monetary Transmission Mechanism in the East African Community: An Empirical Investigation," IMF Working Papers 2013/039, International Monetary Fund.

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