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Monetary Policy and Economic Growth in Developing Countries: A Literature Review

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  • Marouane Daoui

Abstract

This article conducts a literature review on the topic of monetary policy in developing countries and focuses on the effectiveness of monetary policy in promoting economic growth and the relationship between monetary policy and economic growth. The literature review finds that the activities of central banks in developing countries are often overlooked by economic models, but recent studies have shown that there are many factors that can affect the effectiveness of monetary policy in these countries. These factors include the profitability of central banks and monetary unions, the independence of central banks in their operations, and lags, rigidities, and disequilibrium analysis. The literature review also finds that studies on the topic have produced mixed results, with some studies finding that monetary policy has a limited or non-existent impact on economic growth and others finding that it plays a crucial role. The article aims to provide a comprehensive understanding of the current state of research in this field and to identify areas for future study.

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  • Marouane Daoui, 2023. "Monetary Policy and Economic Growth in Developing Countries: A Literature Review," Papers 2303.03162, arXiv.org.
    • Handle: RePEc:arx:papers:2303.03162
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    References listed on IDEAS

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    1. Chirinko, Robert S, 1993. "Business Fixed Investment Spending: Modeling Strategies, Empirical Results, and Policy Implications," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1875-1911, December.
    2. Robert S. Chirinko, 1992. "Business Fixed Investment Spending: A Critical survey of Modeling Strategies, Empirical Results, and Policy Implications," Working Papers 9213, Harris School of Public Policy Studies, University of Chicago.
    3. Mr. Hamid R Davoodi & S. V. S. Dixit & Gabor Pinter, 2013. "Monetary Transmission Mechanism in the East African Community: An Empirical Investigation," IMF Working Papers 2013/039, International Monetary Fund.
    4. Frank Smets & Rafael Wouters, 2007. "Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach," American Economic Review, American Economic Association, vol. 97(3), pages 586-606, June.
    5. Bouchra Benyacoub & Marouane Daoui, 2021. "Impact des chocs de politique monétaire sur la croissance économique au Maroc : modélisation FECM," Post-Print hal-03315795, HAL.
    6. Ismail O Fasanya & Adegbemi B.O Onakoya & Mariam A Agboluaje, 2013. "Does Monetary Policy Influence Economic Growth in Nigeria?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(5), pages 635-646.
    7. Ismail O. FASANYA & Adegbemi B.O ONAKOYA & Mariam A. AGBOLUAJE, 2013. "Does Monetary Policy Influence Economic Growth in Nigeria?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(5), pages 635-646, May.
    8. Marouane Daoui & Bouchra Benyacoub, 2021. "Monetary Policy Shocks and Economic Growth in Morocco: A Factor-Augmented Vector Autoregression (FAVAR) Approach [Chocs de politique monétaire et croissance économique au Maroc : Une approche de ty," Post-Print hal-03277727, HAL.
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