Monetary policy can matter in poor countries – IMF paper
Study suggests changes to money supply may have impact through exchange rate
Central bank policies in low-income countries can have a substantial impact on inflation, new International Monetary Fund research concludes. The paper, using Guinea as a case study, finds “a robust relationship between monetary aggregates, the exchange rate and inflation dynamics”.
The paper says external price shocks are a major factor in local price formation. However, its authors – Yan Carrière-Swallow, Nelnan Fidèle Koumtingué and Sebastian Weber – isolated two periods when monetary policy
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