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Optimal Monetary Policy with Output and Asset Price Volatility in an Open Economy: Evidence from Kenya

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  • Peter Wamalwa

Abstract

This paper attempts to establish optimal response of monetary policy to output, inflation and asset price volatility in a small open economy, taking into account optimisation behaviour of households and firms. The empirical analysis suggest that monetary policy responds to deviation of interest rate and output growth rate from their targets with greater weight compared […]

Suggested Citation

  • Peter Wamalwa, 2018. "Optimal Monetary Policy with Output and Asset Price Volatility in an Open Economy: Evidence from Kenya," Working Papers 734, Economic Research Southern Africa.
    • Handle: RePEc:rza:wpaper:734
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    More about this item

    Keywords

    Financial Markets; Monetary Policy;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G1 - Financial Economics - - General Financial Markets

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