Monetary Policy in Sub-Saharan Africa

Edited by Andrew Berg and Rafael Portillo

Focuses on monetary policy issues in Africa to provide a comprehensive overview of academic debates in this area
Makes unique use of general equilibrium models to analyse Sub-Saharan Africa monetary policy
Extensive use of case studies from the region educate the reader to develop and apply models for policy analysis to country specific policy issues
Published in the Africa: Policies for Prosperity Series
Includes foreword by series editors Christopher Adam and Paul Collier

Monetary Policy in Sub-Saharan Africa

Edited by Andrew Berg and Rafael Portillo

Description

Low-income countries in sub-Saharan Africa present unique monetary policy challenges, from the high share of volatile food in consumption to underdeveloped financial markets; however most academic and policy work on monetary policy is aimed at much richer countries. Can economic models and methods invented for rich countries even be adapted and applied here? How does and should monetary policy work in sub-Saharan African? Monetary Policy in Sub-Saharan Africa answers these questions and provides practical tools and policy guidance to respond to the complex challenges of this region.

Most countries in sub-Saharan Africa have made great progress in stabilizing inflation over the past two decades. As they have achieved a degree of basic macroeconomic stability, policymakers are looking to avoid policy misalignments and respond appropriately to shocks in order to achieve stability and growth. Officially, they often have adopted "money targeting" frameworks, a regime that has long disappeared from almost all advanced and even emerging-market discussions. In practice, though, they are in many cases finding current regimes lacking, with opaque and sometimes inconsistent objectives, inadequate transmission of policy to the economy, and difficulties in responding to supply shocks. Monetary Policy in Sub-Saharan Africa takes a new approach by applying dynamic general equilibrium models suitably adapted to reflect key features of low-income countries for the analysis of monetary policy in sub-Saharan African countries.

Using a progressive approach derived from the International Monetary Fund's extensive practice and research, Monetary Policy in Sub-Saharan Africa seeks to address what we know about the empirics of monetary transmission in low-income countries, how monetary policy can work in countries characterized by underdeveloped financial markets and opaque policy regimes, and how we can use empirical and theoretical methods largely derived in advanced countries to answer these questions. It then uses these key topics to guide policymakers as they attempt to adjust food price, terms of trade, aid shocks, and the effects of the global financial crisis.

Monetary Policy in Sub-Saharan Africa

Edited by Andrew Berg and Rafael Portillo

1:Monetary Policy in Sub-Saharan Africa, Andrew Berg and Rafael Portillo
2:Inflation Targeting in Uganda: What Lessons Can We Learn from Five Years of Experience?, Martin Brownbridge and Louis Kasekende
Section I: Empirical Evidence
3:Introduction to Section I, Andrew Berg and Rafael Portillo
4:Economic Fluctuations in Sub-Saharan Africa, Giovanni Melina and Rafael Portillo
5:The Monetary Transmission Mechanism: Lessons from a Dramatic Event, Andrew Berg, Jan Vlcek, Luisa Charry, and Rafael Portillo
6:Identifying the Monetary Transmission Mechanism in Sub-Saharan Africa, Bin Grace Li, Christopher Adam, Andrew Berg, Peter Montiel, and Stephen O'Connell
Section II: Analytical Issues Relevant for Monetary Policy Analysis in Sub-Saharan Africa
7:Introduction to Section II, Andrew Berg and Rafael Portillo
8:On the Role of Money Targets in the Monetary Policy Framework in SSA: Insights from a New-Keynesian Model with Incomplete Information, Andrew Berg, Rafael Portillo, and D. Filiz Unsal
9:Implementation Errors and Incomplete Information: Implications for the Effects of Monetary Policy in Low-Income Countries, Rafael Portillo, D. Filiz Unsal, Stephen O'Connell, and Catherine Pattillo
10:On the First-Round Effects of International Food Price Shocks, Rafael Portillo and Luis-Felipe Zanna
11:Implications of Food Subsistence for Monetary Policy and Inflation, Rafael Portillo, Luis-Felipe Zanna, Stephen O'Connell, and Richard Peck
12:The Short Run Macroeconomics of Aid Inflows: Understanding the Interaction of Fiscal and International Reserve Policy, Andrew Berg, Tokhir Mirzoev, Rafael Portillo, Luis-Felipe Zanna
13:Modeling Sterilized Interventions and Balance Sheet Effects of Monetary Policy in a New-Keynesian Framework, Jaromir Benes, Andrew Berg, Rafael Portillo, and David Vavra
Section III: Applied Models for Policy Analysis and Forecasting in SSA: Selected Case Studies
14:Introduction to Section III, Andrew Berg and Rafael Portillo
15:On the Sources of Inflation in Kenya: A Model-Based Approach, Michal Andrle, Andrew Berg, Armando Morales, Rafael Portillo, and Jan Vlcek
16:Do Money Targets Matter for Monetary Policy in Kenya?, Michal Andrle, Andrew Berg, Enrico Berkes, Armando Morales, Rafael Portillo, and Jan Vlcek
17:Monetary Policy in Zambia in the Face of the Global Crisis: A Structural Analysis, Alfredo Baldini, Jaromir Benes, Andrew Berg, Mai C. Dao, and Rafael Portillo
18:Introducing a Semi-Structural Macroeconomic Model for Rwanda, Luisa Charry, Pranav Gupta, and Vimal Thakoor
19:Inflation Forecast Targeting in a Low Income Country: The Case of Ghana, Ali Alichi, Marshall Mills, Douglas Laxton, and Hans Weisfeld
20:A Structural Analysis of the Determinants of Inflation in the CEMAC Region, Rafael Portillo

Monetary Policy in Sub-Saharan Africa

Edited by Andrew Berg and Rafael Portillo

Author Information

Edited by Andrew Berg, Deputy Director, Institute for Capacity Development, International Monetary Fund, and Rafael Portillo, Deputy Division Chief, Economic Modelling Division, Research Department, International Monetary Fund

Andrew Berg is Deputy Director of the IMF's Institute for Capacity Development. He first joined the IMF in 1993 and has most recently worked recently in the Research Department as chief of the development macroeconomic division. Before that, he worked in the African Department, including as chief of the regional studies division and mission chief to Malawi, and in the Department of Strategy Policy and Review. He has also worked at the U.S. Treasury and as an associate of Jeffrey Sachs. He has a Ph.D. in Economics from MIT and an undergraduate degree from Harvard. He has published articles on, among other things, growth accelerations, the macroeconomics of aid, predicting currency crises, inequality, and the implications of public investment for debt sustainability, in addition to monetary policy.

Rafael Portillo is at the IMF, where he has worked in the Western Hemisphere, Monetary and Capital Markets, African, and Research Departments. He took leave from the IMF in 2016-17 to work at the Joint Vienna Institute. His work has focused on macroeconomic modeling and monetary policy issues, through surveillance, research and technical assistance. Mr. Portillo has coauthored several IMF policy papers, working papers and academic publications. He received his PhD in Economics in 2006 from the University of Michigan and also holds degrees from the Université Paris I (Panthéon-Sorbonne) and the Université Paris IX (Dauphine).

Contributors:

Andrew Berg, Deputy Director, Institute for Capacity Development, IMF
Rafael Portillo, Deputy Division Chief, Economic Modelling Division, Research Department, IMF
Christopher Adam, Professor of Development Economics, Head of the Department of International Development, and Research Associate at the Centre for the Study of African Economies, University of Oxford, UK
Ali Alich, Senior Economist, Western Hemisphere Department, IMF
Michal Andrle, Senior Economist, Research Department, IMF
Alfredo Baldini, IMF Resident Representative, Zambia
Jaromir Benes, Senior Economist, IMF
Enrico Berkes, PhD Candidate, Northwestern University
Martin Brownbridge, Economic Advisor to the Governor of the Bank of Uganda
Luisa Charry, Senior Economist, African Department, IMF
Mai Dao, Economist, IMF
Pranav Gupta, Economist, Strategy, Policy, and Review Department, IMF
Louis Kasekende, Deputy Governor, Bank of Uganda
Douglas Laxton, Division Chief of the Economic Modeling Division (EMD), Research Department, IMF
Bin Grace Li, Senior Economist, Research Department, IMF
Giovanni Melina, Economist, Research Department, IMF
Marshall Mills, Mission Chief for Madagascar, Seychelles, and Togo, African Department, IMF
Tokhir Mirzoev, Resident Representative for Pakistan, IMF
Peter Montiel, Farleigh S. Dickinson Jr. '41 Professor of Economics at Williams College, Williamstown, Massachusetts
R. Armando Morales, Resident Representative in Kenya, IMF
Stephen O'Connell, Gil and Frank Mustin Professor of Economics, Swarthmore College
Catherine Pattillo, Assistant Director, Fisca; Affairs Department, IMF
Richard Peck, Doctoral Student, Northwestern University
Vimal Thakoor, Economist, IMF
D. Filiz Unsal, Economist, IMF
David Vavra, Managing Partner, OGResearch
Jan Vlcek, Advisor to the Board, Czech National Bank
Hans Weisfeld, Deputy Division Chief, Strategy, Policy, and Review Department, IMF
Luis-Felipe Zanna, Senior Economist, Institute for Capacity Development, IMF