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Sectoral Effects of Monetary Policy in Uganda


  • Dorothy Nampewo
  • Ezra Munyambonera and Musa Mayanja Lwanga


The paper investigates the sectoral effects of monetary policy in Uganda over the period 1999 to 2011. Sectors which are the key drivers of Uganda‟s GDP growth are analysed. These include agriculture, manufacturing and service sectors. The analysis based on pairwise granger causality test and estimating a recursive VAR reveals that the exchange rate channel is the most effective monetary policy transmission channel to all the three sectors studied, while the interest rates and bank credit channels remain relatively weak channels of monetary policy especially within the manufacturing sector. Furthermore, a positive shock in exchange rates results into growth of agriculture and service sectors‟ GDP. The contrast is realised in the manufacturing sector. Thus, based on these findings, empasis should be put on maintaining a stable exchange rate that favors both exports and imports to ensure growth of both the manufacturing sector which mainly relys on imported-inputs and the agricultural and services sectors‟ exports.

Suggested Citation

  • Dorothy Nampewo & Ezra Munyambonera and Musa Mayanja Lwanga, 2013. "Sectoral Effects of Monetary Policy in Uganda," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 1(2), pages 43-58.
  • Handle: RePEc:rss:jnljee:v1i2p1

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    Cited by:

    1. Kenny S, Victoria, 2019. "The effect of real shocks on business cycle fluctuations. A Bayesian panel vector autoregressive approach," MPRA Paper 95716, University Library of Munich, Germany.
    2. Charaf-Eddine Moussir, 2017. "Effets sectoriels de la politique monétaire et activité économique: cas du Maroc," Post-Print hal-01449490, HAL.
    3. Sawuya Nakijoba, 2018. "Determinants of Nominal Effective Exchange Rate in Uganda (2000-2017): A Vecm Approach," Applied Economics and Finance, Redfame publishing, vol. 5(5), pages 45-58, September.


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