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Assessing the effect of monetary policy on economic growth in franc zone

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  • Douanla Tayo, Lionel

Abstract

This study aims at assessing the effect of monetary policy on economic growth for the fourteen countries of the Franc zone over the period 1985-2012 using a dynamic panel model. The system estimator of the generalized method of moments has allowed us to demonstrate a significant and negative effect of domestic credit provided by banking sector on economic growth. The analysis reveals that money supply has significant positive effect on economic growth, while total reserves and inflation have a negative effect. However the negative effect of domestic credit provided by banking sector can be reversed through allocation of funds to those projects for which the social returns are the highest and through allocation of funds to productive local industries.

Suggested Citation

  • Douanla Tayo, Lionel, 2014. "Assessing the effect of monetary policy on economic growth in franc zone," MPRA Paper 60201, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:60201
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    References listed on IDEAS

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    More about this item

    Keywords

    Domestic credit; real GDP; dynamic panel; GMM;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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    This paper has been announced in the following NEP Reports:

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