Macroeconomic Effects of Mobile Money in Uganda

Joseph Mawejje and Corti Lakuma

No 260017, Research Series from Economic Policy Research Centre (EPRC)

Abstract: This paper examines the effects of mobile money, a rather new innovation in Uganda’s financial sector landscape on aggregate economic activity and other macroeconomic variables. We first estimate the long-run effect of mobile money deposits and value of transactions on monetary aggregates using vector error correction (VEC) techniques. We then estimate the short-term effects of mobile money on selected macroeconomic variables using Structural Vector Autoregressive (SVAR) methods. Results show modest macroeconomic impacts: mobile money has moderate positive effects on monetary aggregates, the consumer price index, and private sector credit. Mobile money deposits do respond to changes in monetary policy instruments, signalling possible ameliorating effects for the conduct of monetary policy. These results provide evidence for policy makers to continue supporting the growth of mobile money platforms. In particular, policy makers should provide the policy and regulatory framework through which mobile money balances can become interest-bearing assets, as this will further strengthen the monetary policy transmission mechanism.

Keywords: Community/Rural/Urban Development; Demand and Price Analysis; Financial Economics; Public Economics; Resource/Energy Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 34
Date: 2017-06-30
New Economics Papers: this item is included in nep-mac, nep-mon and nep-pay
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eprcrs:260017

DOI: 10.22004/ag.econ.260017

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