Towards a Rule-based Approach to Monetary Policy Evaluation in Sub-Saharan Africa-super- †
I review the three-equation AS/IS/MP model that is at the core of the dynamic stochastic general equilibrium (DSGE) models in use within central banks in the industrial countries. Monetary policy (MP) rules play a central role in these models, and alternative rules can be compared in terms of their implications for the economy's dynamic adjustment to shocks. I discuss the advantages of DSGE modelling in low-income countries and show how interest-rate rules can be adapted to reflect the balance-sheet instruments widely used among African countries. I also identify features of the African economic environment that are poorly captured by existing models, including a large and volatile food sector, imperfect capital mobility and a credit channel for monetary policy. To illustrate the DSGE approach, I develop a model in which food supply shocks play a key role in inflation dynamics. I show that private storage can generate serial correlation of food price inflation when food price shocks are serially uncorrelated. Copyright 2011 The author 2011. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: firstname.lastname@example.org, Oxford University Press.
Volume (Year): 20 (2011)
Issue (Month): suppl_2 (May)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Phone: +44-(0)1865 271084
Fax: 01865 267 985
Web page: http://www.jae.oupjournals.org/
More information through EDIRC
|Order Information:||Web: http://www.oup.co.uk/journals|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Inci Ã–tker & David VÃ¡vra & Francisco F. Vazquez & Luis Ignacio JÃ¡come & Karl Friedrich Habermeier & Kotaro Ishi & Alessandro Giustiniani & Turgut Kisinbay, 2009. "Inflation Pressures and Monetary Policy Options in Emerging and Developing Countriesâ€”A Cross Regional Perspective," IMF Working Papers 09/1, International Monetary Fund.
- Christopher Adam & Stephen O'Connell & Edward Buffie & Catherine Pattillo, 2009.
"Monetary Policy Rules for Managing Aid Surges in Africa,"
Review of Development Economics,
Wiley Blackwell, vol. 13(s1), pages 464-490, 08.
- Edward F. Buffie & Stephen A. O'Connell & Catherine A. Pattillo & Christopher Adam, 2007. "Monetary Policy Rules for Managing Aid Surges in Africa," IMF Working Papers 07/180, International Monetary Fund.
- Adam, Christopher S. & Buffie, Edward & O'Connell, Stephen & Pattillo, Catherine, 2008. "Monetary Policy Rules for Managing Aid Surges in Africa," Working Paper Series RP2008/77, World Institute for Development Economic Research (UNU-WIDER).
- Christopher Adam & Stephen O’Connell & Edward Buffie, 2007. "Monetary Policy Rules For Manging Aid Surges In Africa," WEF Working Papers 0016, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
- Ben S. Bernanke & Frederic S. Mishkin, 1997.
"Inflation Targeting: A New Framework for Monetary Policy?,"
NBER Working Papers
5893, National Bureau of Economic Research, Inc.
- Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
- Olivier Blanchard & Jordi Galí, 2005.
"Real Wage Rigidities and the New Keynesian Model,"
243, Barcelona Graduate School of Economics.
- Olivier Jean Blanchard & Jordi Galí, 2005. "Real wage rigidities and the New Keynesian model," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
- Olivier Blanchard & Jordi Galí, 2007. "Real Wage Rigidities and the New Keynesian Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 35-65, 02.
- Olivier Blanchard & Jordi Gali, 2005. "Real Wage Rigidities and the New Keynesian Model," NBER Working Papers 11806, National Bureau of Economic Research, Inc.
- Blanchard, Olivier J & Galí, Jordi, 2005. "Real Wage Rigidities and the New Keynesian Model," CEPR Discussion Papers 5375, C.E.P.R. Discussion Papers.
- Olivier Jean Blanchard & Jordi Galí, 2005. "Real wage rigidities and the New Keynesian model," Working Papers 05-14, Federal Reserve Bank of Boston.
- Olivier Blanchard & Jordi Galí, 2005. "Real wage rigidities and the new Keynesian model," Economics Working Papers 912, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2005.
- By Mohsin S. Khan & Abdelhak S. Senhadji, 2001.
"Threshold Effects in the Relationship Between Inflation and Growth,"
IMF Staff Papers,
Palgrave Macmillan, vol. 48(1), pages 1.
- Abdelhak Senhadji & Mohsin S. Khan, 2000. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Working Papers 00/110, International Monetary Fund.
- Régis Barnichon & Shanaka J. Peiris, 2008.
"Sources of Inflation in Sub-Saharan Africa,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 17(5), pages 729-746, November.
- Brito, Ricardo D. & Bystedt, Brianne, 2010.
"Inflation targeting in emerging economies: Panel evidence,"
Journal of Development Economics,
Elsevier, vol. 91(2), pages 198-210, March.
- Bystedt, Brianne & Brito, Ricardo D., 2008. "Inflation targeting in emerging economies: Panel evidence," Insper Working Papers wpe_125, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
- Asea, Patrick K & Reinhart, Carmen M, 1996. "Le Prix de l'Argent: How (Not) to Deal with Capital Inflows," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 5(3), pages 231-71, October.
- Loening, Josef L. & Durevall, Dick & Ayalew Birru, Yohannes, 2009.
"Inflation Dynamics and Food Prices in an Agricultural Economy: The Case of Ethiopia,"
Working Papers in Economics
347, University of Gothenburg, Department of Economics.
- Loening, Josef L. & Durevall, Dick & Birru, Yohannes A., 2009. "Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia," Policy Research Working Paper Series 4969, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:oup:jafrec:v:20:y:2011:i:suppl_2:p:-ii66. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.