IDEAS home Printed from https://ideas.repec.org/a/ids/ijsuse/v10y2018i1p18-40.html
   My bibliography  Save this article

The effect of external shocks on macroeconomic performance and monetary policy in a small open economy: evidence from Zambia

Author

Listed:
  • Patrick Mumbi Chileshe
  • Keegan Chisha
  • Masauso Ngulube

Abstract

This study investigates the impact of external shocks on domestic macroeconomic variables and monetary policy of a small open economy, Zambia using a structural VAR estimated with quarterly data covering the period Q1 2000 to Q1 2016. Results indicate that monetary policy is pro-cyclical in response to external shocks, while the dominant external shocks are commodity price shocks followed by financial shocks. This implies that external shocks are clear determinants of monetary policy direction in Zambia owing to their effect on key macroeconomic variable. In addition, results from impulse responses indicate that external shocks have significant effects on Zambia's macroeconomic performance. Specifically, commodity price shocks have significant effects on output and exchange rate while financial shocks have significant effects on prices and exchange rate.

Suggested Citation

  • Patrick Mumbi Chileshe & Keegan Chisha & Masauso Ngulube, 2018. "The effect of external shocks on macroeconomic performance and monetary policy in a small open economy: evidence from Zambia," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(1), pages 18-40.
  • Handle: RePEc:ids:ijsuse:v:10:y:2018:i:1:p:18-40
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=88621
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rodion V. Balakin & Yuliya A. Steshenko, 2024. "Review of Approaches to Assessing the Impact of New Challenges on the Economy and Certain Aspects of Taxation," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 3, pages 68-85, June.
    2. Sedegah Kordzo & Odhiambo Nicholas M., 2021. "A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 31(3), pages 37-59, September.
    3. Titus Ayobami Ojeyinka & Dauda Olalekan Yinusa, 2023. "External Shocks and Their Transmission Channels in Nigeria: A Dynamic Stochastic General Equilibrium Approach," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(1), pages 132-153, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijsuse:v:10:y:2018:i:1:p:18-40. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=301 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.