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Sectoral effects of monetary policy in Uganda

Author

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  • Dorothy Nampewo
  • Ezra Munyambonera
  • Musa Mayanja Lwanga

Abstract

The paper investigates the sectoral effects of monetary policy in Uganda over the period 1999 to 2011. Sectors which are the key drivers of Uganda’s GDP growth were analyzed. These included agriculture, manufacturing and service sectors. The analysis based on pair wise granger causality test and estimating a recursive VAR reveals that the exchange rate channel is the most effective monetary policy transmission channel to all the three sectors studied, while the interest rates and bank credit channels remain relatively weak channels of monetary policy especially within the manufacturing sector. Furthermore, a positive shock in exchange rates results into growth of agriculture and service sectors’ GDP. The contrast is realized in the manufacturing sector. Thus, based on these findings, emphasis should be put on maintaining a stable exchange rate that favors both exports and imports to ensure growth of both the manufacturing sector which mainly relies on imported-inputs and the agricultural and services sectors’ exports.

Suggested Citation

  • Dorothy Nampewo & Ezra Munyambonera & Musa Mayanja Lwanga, 2013. "Sectoral effects of monetary policy in Uganda," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 2(4), pages 1-2.
    • Handle: RePEc:spt:stecon:v:2:y:2013:i:4:f:2_4_2
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    Cited by:

    1. Ikechukwu Kelikume, 2015. "Interest Rate And Credit Sensitivity Of Sectoral Output In Nigeria," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(4), pages 103-114.
    2. Moussir, Charaf Eddine, 2017. "Effets sectoriels de la politique monétaire et activité économique: cas du Maroc [Sectoral Effects of Monetary Policy on Economic Activity: Case of Morocco]," MPRA Paper 76488, University Library of Munich, Germany.
    3. Sawuya Nakijoba, 2018. "Determinants of Nominal Effective Exchange Rate in Uganda (2000-2017): A Vecm Approach," Applied Economics and Finance, Redfame publishing, vol. 5(5), pages 45-58, September.
    4. Kenny S, Victoria, 2019. "The effect of real shocks on business cycle fluctuations. A Bayesian panel vector autoregressive approach," MPRA Paper 95716, University Library of Munich, Germany.
    5. Ogbuabor, Jonathan E. & Anthony-Orji, Onyinye I. & Manasseh, Charles O. & Orji, Anthony, 2020. "A Disaggregated Analysis Of Monetary Policy Effects On The Agricultural Sector In Nigeria," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 14(3-4), December.
    6. Charaf Eddine Moussir & Abdellatif Chatri, 2017. "Sectoral Effects Of Monetary Policy: Evidence From Morocco," Post-Print hal-01449475, HAL.

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