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An Empirical Analysis of the Monetary Transmission Mechanism of Developing Economies: Evidence from Ghana

Felix S. Nyumuah

International Journal of Economics and Finance, 2018, vol. 10, issue 4, 72-83

Abstract: Policymakers need a clear understanding of their monetary transmission mechanisms for effective implementation of monetary policy. The aim of this study is to carry out an econometric analysis of the channels of monetary transmission mechanism in less developed economies so as to determine their effectiveness. The study uses Ghana macroeconomic data and finds the money supply channel to be the strongest in the long run while the exchange rate channel seems the strongest in transmitting monetary impulses in the short run. The interest rate and the bank credit to private sector channels emerge as very weak channels of monetary transmission.

Keywords: monetary transmission mechanism; monetary policy; vector auto regression; variance decomposition (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2018
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