Monetary policy and excess liquidity: the case of Guyana

Tarron Khemraj

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the monetary policy framework of Guyana. Guyana’s monetary Policy is motivated by the IMF’s financial programming model. The quantity of excess reserves in the banking system is seen as critical in determining bank credit and ultimately the external balance and inflationary pressures. Therefore, the central bank is always willing to mop up excess liquidity by selling Treasury bills. The paper examines the potential sources of persistent excess reserves. It then tests using the VAR methodology whether excess reserves exert the postulated effect on the price level and exchange rate.

Keywords: excess liquidity; financial programming; monetary policy; Guyana (search for similar items in EconPapers)
JEL-codes: E0 E40 E5 E51 (search for similar items in EconPapers)
Date: 2007-05
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Citations: View citations in EconPapers (8)

Published in Social and Economic Studies 3.56(2007): pp. 101-127

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