Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324030 
Year of Publication: 
2020
Citation: 
[Journal:] PSL Quarterly Review [ISSN:] 2037-3643 [Volume:] 73 [Issue:] 293 [Year:] 2020 [Pages:] 181-201
Publisher: 
Associazione Economia civile, Rome
Abstract: 
While autonomous central banks in large open economies are usually predisposed to use monetary rules to target inflation, output, and long-term interest rates, central banks in small open economies face peculiar challenges in their attempts to attain and maintain liquidity, stable prices and full employment. This paper investigates the effects of monetary policy in the case of Sierra Leone, assuming that information for rule-based monetary policy is insufficient and imprecise. We use the Bayesian model to evaluate primitive (priors), posterior enhancements and responses of key variables to exogenous perturbations based on information from 2007 to 2018. We find that the effects of disturbances that are associated with crude oil prices have a more persistent effect on national output than the dominant monetary instrument (T-Bills). The response of monetary policy to exogenous perturbations is generally weak and less persistent. Granger-causality tests reveal that internal conditions make it less likely for the central bank to robustly react to external shocks.
Subjects: 
Cointegration
Bayesian VARS
Inflation
Impulse response
Money supply
Oil shocks
JEL: 
E42
E47
E50
E52
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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