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An Empirical Analysis of the Monetary Transmission Mechanism of Developing Economies: Evidence from Ghana

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  • Felix S. Nyumuah

Abstract

Policymakers need a clear understanding of their monetary transmission mechanisms for effective implementation of monetary policy. The aim of this study is to carry out an econometric analysis of the channels of monetary transmission mechanism in less developed economies so as to determine their effectiveness. The study uses Ghana macroeconomic data and finds the money supply channel to be the strongest in the long run while the exchange rate channel seems the strongest in transmitting monetary impulses in the short run. The interest rate and the bank credit to private sector channels emerge as very weak channels of monetary transmission.

Suggested Citation

  • Felix S. Nyumuah, 2018. "An Empirical Analysis of the Monetary Transmission Mechanism of Developing Economies: Evidence from Ghana," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(4), pages 72-83, April.
    • Handle: RePEc:ibn:ijefaa:v:10:y:2018:i:4:p:72-83
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    Cited by:

    1. Dekkiche Djamal, 2022. "Impact of Money Supply on Inflation Rate in Egypt: A VECM Approach," Economics and Business, Sciendo, vol. 36(1), pages 134-148, January.
    2. Muhammad Zahid & Faiza Khalid & Muhammad Ramzan & Muhammad Zia Ul Haq & Wonseok Lee & Jinsoo Hwang & Jimin Shim, 2021. "The Significance of Monetary Policy Transmission Mechanism in the Sustainable Development of the SAARC Economic Community," Sustainability, MDPI, vol. 13(23), pages 1-19, November.

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    More about this item

    Keywords

    monetary transmission mechanism; monetary policy; vector auto regression; variance decomposition;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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