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Analysis and evaluation of the Monetary Policy Transmission Channels in the CEMAC: A SVAR and SPVAR Approaches

BIKAI, J. Landry and KENKOUO, Guy Albert (2015): Analysis and evaluation of the Monetary Policy Transmission Channels in the CEMAC: A SVAR and SPVAR Approaches.

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Abstract

This paper’s main objective is to analyse and identify the the effects of monetary policy decisions on activity and inflation, and determines the main transmission channel in the CEMAC area. The results suggest that: (i) for each country, using a SVAR, the transmission mechanisms are very weak, and the common monetary policy has asymmetrical lagged effects on activity. We specifically found that the transmission mechanisms barely work in Congo, the Central African Republic, Gabon, Tchad and Equatorial Guinea, but a shock on broad money and the policy rate of the central bank has significant but weak effects on activity in Cameroon; and (ii) the Panel VAR analysis also confirms the weakness of the transmission mechanisms in the sub region. However, a positive shock on credit exhibits inflationary effects that last about three quarters.

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