Optimal Monetary Policy with Inflation, Output and Asset Price Volatility in an Open Economy

dc.contributor.authorWamalwa, Peter
dc.date.accessioned2023-08-23T11:57:18Z
dc.date.available2023-08-23T11:57:18Z
dc.date.issued2023-08
dc.description.abstractThis paper aims to establish optimal response of monetary policy to output, inflation, and asset price volatility in small open economies of Kenya and Ghana. The paper estimates a monetary policy response function for inflation, asset prices, and output volatility developed from a dynamic stochastic general equilibrium model using quarterly data from 2000 to 2018. The analysis shows that monetary policy accord inflation greatest weight Compared to output and asset prices. However, there are differences in the sensitivity of monetary policy across the economies, and hence price, output, and welfare outcomes. The prioritization of inflation stifles output growth more in Ghana than in Kenya due to high interest rate. Despite monetary policy prioritizing inflation in Ghana, average inflation is higher compared to Kenya. Results from dynamic optimization shows that, a consistent intervention in the economy to stabilize inflation, output, nominal exchange rate, and asset prices, achieves higher welfare.
dc.identifier.urihttps://publication.aercafricalibrary.org/handle/123456789/3637
dc.language.isoen_US
dc.publisherAfrican Economic Research Consortium
dc.titleOptimal Monetary Policy with Inflation, Output and Asset Price Volatility in an Open Economy
dc.typeArticle
Files
Original bundle
Now showing 1 - 1 of 1
Loading...
Thumbnail Image
Name:
Research Paper 532.pdf
Size:
1.91 MB
Format:
Adobe Portable Document Format
Description:
License bundle
Now showing 1 - 1 of 1
Loading...
Thumbnail Image
Name:
license.txt
Size:
1.71 KB
Format:
Item-specific license agreed upon to submission
Description: