Monetary policy and its transmission mechanisms in Eritrea

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dc.contributor.authorMengesha, Lula G.
dc.contributor.authorHolmes, Mark J.
dc.date.accessioned2013-08-20T02:54:40Z
dc.date.available2013-08-20T02:54:40Z
dc.date.copyright2013-09
dc.date.issued2013
dc.description.abstractThe main purpose of this study is to identify the best practices of monetary policy implementation in the Eritrean economy. As such, the paper examines what kind of monetary policy and transmission mechanisms are relevant to the Eritrean economy. It also addresses which channels are effective and which are not and why. Vector Autoregressive modelling is employed over the study period 1996Q1–2008Q4. This paper addresses the argument that the bank lending is the sole functioning channel in low income economies. We find that interest rate and official exchange rate channels are inoperative. However, effective exchange rate and credit channels exist through the black foreign exchange market and credit issued to the government sector. The main policy implication of this study is that the Bank of Eritrea might be able to control inflation through manipulating the reserve requirement ratio.en_NZ
dc.identifier.citationHolmes, M. J. & Mengesha, L. G. (2013). Monetary policy and its transmission mechanisms in Eritrea. Journal of Policy Modeling, 35(5), 766-780.en_NZ
dc.identifier.doi10.1016/j.jpolmod.2013.06.001en_NZ
dc.identifier.urihttps://hdl.handle.net/10289/7879
dc.language.isoenen_NZ
dc.publisherElsevieren_NZ
dc.relation.isPartOfJournal of Policy Modelingen_NZ
dc.relation.ispartofJournal of Policy Modeling
dc.relation.urihttp://www.sciencedirect.com/science/article/pii/S0161893813000719en_NZ
dc.subjectmonetary policyen_NZ
dc.subjectinterest rate channelen_NZ
dc.subjectexchange rate channel and credit channelen_NZ
dc.titleMonetary policy and its transmission mechanisms in Eritreaen_NZ
dc.typeJournal Articleen_NZ
pubs.begin-page766en_NZ
pubs.elements-id38570
pubs.end-page780en_NZ
pubs.issue5en_NZ
pubs.volume35en_NZ
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