Measuring and mending monetary policy effectiveness under capital account restrictions: lessons from Mauritania

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Periodical article

Title:	Measuring and mending monetary policy effectiveness under capital account restrictions: lessons from Mauritania
Author:	Blotevogel, Robert
Year:	2014
Periodical:	Journal of African Economies (ISSN 0963-8024)
Volume:	23
Issue:	3
Pages:	388-422
Language:	English
Geographic term:	Mauritania
Subjects:	monetary policy loans economic models
External link:	https://doi.org/10.1093/jae/eju004
Abstract:	The author proposes a new approach to identify exogenous monetary policy shocks in low-income countries with capital account restrictions. In the case of Mauritania, a domestic repatriation requirement is the institutional characteristic that allows him to establish exogeneity. Unlike in advanced countries, the author finds no evidence for a statistically significant impact of exogenous monetary policy shocks on bank lending. Using a unique bank-level data set on monthly balance sheets of six Mauritanian banks over the period 2006-11, the author estimates structural vector autoregressions and two-stage least square panel models to demonstrate the ineffectiveness of monetary policy. Finally, the authors discusses how a reduction in banks' loan concentration ratios and improvements in the liquidity management framework could make monetary stimuli more effective. Bibliogr., notes, ref., sum. [Journal abstract]