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Openness and the Effects of Monetary Policy in Africa

Akpan H. Ekpo and Ekpeno Effiong ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the relationship between a country's openness to trade and the effects of monetary policy on output growth and inflation in Africa. Theory suggest that monetary policy effectiveness is influenced by the degree of openness to international trade. We apply standard panel data techniques to annual data from the period 1990-2015 for a panel of 37 African countries, and find a strong significant relationship between openness and monetary policy effectiveness in Africa. The empirical results indicate that the effects of monetary policy on output growth and inflation increases and decreases respectively with higher levels of trade openness. Therefore, monetary authorities should place emphasis on the level of openness when designing their choice of optimal monetary policy.

Keywords: Openness; Monetary Policy; Africa. (search for similar items in EconPapers)
JEL-codes: C33 E52 F41 O55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-int, nep-mac and nep-mon
Date: 2017-08
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:80847

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