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Money Channel of Monetary Policy Transmission in Namibia

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  • Sheefeni, Johannes P.S.

    (Department of Economics, University of the Western Cape, Cape Town, South Africa)

Abstract

There is an argument that being in an exchange rate pegging arrangement limits the scope of using interest rate to control money supply to affect output or inflation but here is a point of contention in the case of Namibia. This is due to the fact that the major concern in an exchange rate pegging arrangement is that it obliges the central bank (BoN) to limit money creation to levels comparable to those of the anchor country (South Africa), to which the Namibia dollar is pegged. This is because the process of money creation is associated with increase in domestic inflation pressures. This study includes four variables: real output; consumer price level; aggregate money supply; and repo rate, in the structural vector error correction (SVECM) model, to analyse the money channel for monetary policy transmission in Namibia. The model estimated utilised quarterly time-series data covering the period 2000:Q1 to 2016:Q4. The results show that money supply contains information on the monetary policy transmission process, but, there are more factors involved in the responses of output to the repo rate shocks than consumer prices alone. Il canale di trasmissione della politica monetaria in Namibia Il tasso di cambio fisso è talvolta considerato una limitazione al metodo di controllo della domanda di moneta al fine di influenzare la produzione o l’inflazione, ma nel caso della Namibia non è così. Ciò perché il problema principale in un paniere di tassi di cambio è che la banca centrale della Namibia è obbligata a limitare l’emissione di valuta a livelli comparabili a quelli del paese (in questo caso il Sud Africa) al quale il dollaro della Namibia è agganciato. Questo perchè il processo di emissione di moneta è associato all’aumento delle pressioni inflazionistiche interne. In questo articolo sono incluse 4 variabili: produzione reale, prezzi al consumo, domanda aggregata di moneta e tasso repo. Il modello applicato è quello a correzione vettoriale strutturale dell’errore (SVECM) al fine di analizzare il canale di trasmissione della politica monetaria in Namibia. I dati utilizzati sono trimestrali e time series per il periodo primo trimestre 2000-quarto trimestre 2016. I risultati mostrano che la domanda di moneta può dare indicazioni sui processi di trasmissione della politica monetaria, ma altri fattori sono da ricercare nella risposta della produzione agli shock del tasso di cambio piuttosto che dei prezzi al consumo.

Suggested Citation

  • Sheefeni, Johannes P.S., 2020. "Money Channel of Monetary Policy Transmission in Namibia," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(1), pages 131-150.
  • Handle: RePEc:ris:ecoint:0866
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    References listed on IDEAS

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    More about this item

    Keywords

    Structural Vector Error Correction; Exchange Rate Pegging; Money; Monetary Policy; Namibia;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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