Does Financial Development Explain the Cyclicality of Monetary Policy in Sub-saharan Africa?

Itchoko Motande Mondjeli Mwa Ndjokou and Christophe Martial Mbassi ()
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Itchoko Motande Mondjeli Mwa Ndjokou and Christophe Martial Mbassi: University of Yaounde II
Authors registered in the RePEc Author Service: Christophe Martial MBASSI ()

Journal of Economic Development, 2018, vol. 43, issue 4, 71-84

Abstract: This paper evaluates the influence of financial development on the cyclicality of monetary policy in a sample of 22 Sub Saharan African countries. We use a GMM model to estimate an equation of monetary policy stance based on Taylor¡¯s rule over the period 1984-2012. We obtain the following results. Monetary policy is pro-cyclical in Sub Saharan African countries. Central Banks implement counter-cyclical monetary policy when the country exhibits high level of financial development and pro-cyclical monetary policy in the presence of low level of financial development. The threshold level at which monetary policy is a-cyclical lies between 15% and 18%.

Keywords: Policy; Business-cycle; Financial Development; GMM (search for similar items in EconPapers)
JEL-codes: C33 E32 E52 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:43:y:2018:i:4:p:71-84

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