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Botswana's Fiscal Policy, Monetary Policy, and Exchange Rate Policy: Three Intruments and Three Targets

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Abstract

In the decades since Independence Botswana has faced significant macroeconomic challenges. Official institutions set fiscal, monetary, and exchange rate policies in the face of these challenges. This paper identifies a target for each policy, reviews the extent to which each policy has been deployed to achieve its assigned target, and the degree of its success in doing so. Recognising that there are interactions among the policies opens up the possibility of inconsistencies. There have been no egregious inconsistencies, but the failure to take into account the effect of substantial movement of the Rand/SDR exchange rate on prices in Botswana has created a potential policy trilemma.

Suggested Citation

  • J. Clark Leith, 2020. "Botswana's Fiscal Policy, Monetary Policy, and Exchange Rate Policy: Three Intruments and Three Targets," University of Western Ontario, Departmental Research Report Series 20202, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:20202
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    File URL: https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1833&context=economicsresrpt
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    Cited by:

    1. Johane Motsatsi, 2020. "How Non-Diamond Exports Respond to Exchange Rate Volatility in Botswana," Working Papers 77, Botswana Institute for Development Policy Analysis.

    More about this item

    Keywords

    Botswana; policies; fiscal; monetary; exchange rate;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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