EconPapers    
Economics at your fingertips  
 

Monetary Policy and Financial Frictions in a Small Open-Economy Model for Uganda

Francis Anguyo (), Rangan Gupta and Kevin Kotze
Additional contact information
Francis Anguyo: School of Economics, University of Cape Town, South Africa

No 201710, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper considers the role of financial frictions and the conduct of monetary policy in Uganda. It makes use of a dynamic stochastic general equilibrium model, which incorporates small open-economy features and financial frictions that are introduced though the activities of heterogeneous agents in the household. Most of the parameters in the model are estimated with the aid of Bayesian techniques and quarterly macroeconomic data from 2000q1 to 2015q4. The results suggest that the central bank currently responds to changes in the interest rate spread, despite the fact that capital and financial markets are relatively inefficient in this low income country. In addition, the analysis also suggests that to reduce macroeconomic volatility the central bank should continue to respond to these financial sector frictions and that it may be possible to derive a more favourable sacrifice ratio by making use of a slightly more aggressive response to macroeconomic developments.

Keywords: Monetary policy; inflation-targeting; financial frictions; small open-economy; low income country; dynamic stochastic general equilibrium model; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E32 E52 F41 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2017-02
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Monetary policy and financial frictions in a small open-economy model for Uganda (2020) Downloads
Working Paper: Monetary Policy and Financial Frictions in a Small Open-Economy Model for Uganda (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201710

Access Statistics for this paper

More papers in Working Papers from University of Pretoria, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Rangan Gupta ().

 
Page updated 2025-03-31
Handle: RePEc:pre:wpaper:201710