Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Ghana, South Africa and the WAEMU

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dc.contributor.author Al Hajj, Fadia
dc.contributor.author Dufrenot, Gilles
dc.contributor.author Sugimoto, Kimiko
dc.contributor.author Wolf, Romain
dc.date.accessioned 2016-08-30T19:50:35Z
dc.date.available 2016-08-30T19:50:35Z
dc.date.issued 2013-11-01
dc.identifier.other RePEc:wdi:papers:2013-1062
dc.identifier.uri http://hdl.handle.net/2027.42/133082
dc.description.abstract The aim of this paper is to examine the monetary policy actions through which the central banks in the Sub-Saharan African countries have searched to eliminate the negative impacts of the shocks facing their economies. We compare two types of monetary policy regimes: a currency board regime (in the CFA zone countries) and an inflation targeting policy regime (in Ghana and South Africa). We compare the properties of both policies when the central banks respond to three negative shocks hitting the economies: a recessionary demand shock, a supply shock increasing inflation and a negative fiscal shock. We propose an FPAS model (forecasting and monetary policy analysis system) that extends the usual FPAS models used in the literature to evaluate the impact of several policies in response to different types of exogenous shocks. We find that both policies are inappropriate to help the economies exiting from the effects of negative demand shocks (the adjustment relies mainly on fiscal policy), both are essential when negative shocks to primary balance occur (fiscal policy aggravates the negative effects of the shocks), while inflation targeting dominates the currency board regime as a strategy to cope with positive shocks to inflation.
dc.relation.ispartofseries wp1062
dc.subject inflation target
dc.subject currency board
dc.subject African countries
dc.subject.other E52
dc.subject.other F41
dc.subject.other Q33
dc.title Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Ghana, South Africa and the WAEMU
dc.type Working Paper
dc.subject.hlbsecondlevel Economics
dc.subject.hlbtoplevel Business
dc.contributor.affiliationum William Davidson Institute
dc.description.bitstreamurl http://deepblue.lib.umich.edu/bitstream/2027.42/133082/1/wp1062.pdf
dc.contributor.authoremail gilles.dufrenot@univ-amu.fr
dc.owningcollname William Davidson Institute (WDI) - Working Papers
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