Economics at your fingertips  

Adoption of Inflation Targeting in Sierra Leone: An Empirical Discourse

Emerson Jackson (), Mohamed Jabbie (), Edmund Tamuke and Augustine Ngombu
Additional contact information
Edmund Tamuke: Research Economist, Research Department, Bank of Sierra Leone, Sierra Leone

Journal of Economic Policy Researches, 2020, vol. 7, issue 2, 21-50

Abstract: The main research question of this paper is to assess Sierra Leone’s preparedness for adopting a fully-fledged or lite Inflation Targeting (IT) framework amid macroeconomic and structural bottlenecks experienced in the domestic economy. Several theoretical and empirical perspectives were reviewed to bring out cogent insights on the subject matter. With the use of the Unrestricted Vector Autoregression (VAR) model, relevant macroeconomic variables ranging from 2010Q2 to 2019Q4 were utilised to assess plausible outcomes, aided with some iterative shock impulses, variance decomposition, and historical decomposition, to explain the reaction of inflation to specific factors in Sierra Leone. The study outcome suggests that Sierra Leone as a supply-driven economy is inducing a high level of inflation on account of the pass-through effect of high prices to consumers in the domestic economy. This to a greater extent is undermining monetary policy management, which gives credence to the fact that authorities at the Bank of Sierra Leone should not switch to inflation targeting in the short and medium-term on the basis that monetary policy actions could instigate further price increases of goods and services, underpinned by weak real sector operations and a somewhat dollarized domestic market. At best, there is a need for BSL to continue its current policy methodology, while working in ensuring monetary policy actions are transparent and wel

Keywords: Inflation targeting; monetary policy; var; sierra leone (search for similar items in EconPapers)
JEL-codes: E31 E42 E52 E58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

Related works:
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:

DOI: 10.26650/JEPR735604

Access Statistics for this article

Journal of Economic Policy Researches is currently edited by Halil TUNALI

More articles in Journal of Economic Policy Researches from Istanbul University, Faculty of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Ertugrul YASAR ().

Page updated 2021-05-10
Handle: RePEc:ist:iujepr:v:7:y:2020:i:2:p:21-50