WOW !! MUCH LOVE ! SO WORLD PEACE !
Fond bitcoin pour l'amélioration du site: 1memzGeKS7CB3ECNkzSn2qHwxU6NZoJ8o
  Dogecoin (tips/pourboires): DCLoo9Dd4qECqpMLurdgGnaoqbftj16Nvp


Home | Publier un mémoire | Une page au hasard

 > 

Tue dole of National Bank of Rwanda from 1995 to 2010

( Télécharger le fichier original )
par Paterne RUKUNDO
National university of Rwanda - A0 2011
  

précédent sommaire suivant

4.7. INTERPRETATION OF THE RESULTS

Considering the one period lagged value of the monetary stock aggregate (M1), one observes that one unit change in the previous period monetary stock aggregate results in about 0.99 units change in the current monetary stock aggregate, holding other variables the same. This means that, the increase of previous monetary stock aggregate by 1unit, current monetary stock aggregate will increase by 0.99 units, so there is positive relationship between the previous and the current monetary stock aggregate.

Considering the current and the one period lagged inflation gap: It is noticed that for a given change in the one period lagged deviation of the inflation from its target, the monetary stock aggregate reacts by a change of about 1.49 units to current inflation gap and by a change of about 2.8 units to one period lagged inflation gap. This means that, if inflation were 1unit point above its target, the Central Bank would increase the monetary stock aggregate by 1.49 in terms of reaction against current inflation gap, holding other things the same. Regarding the current period of inflation gap, the coefficient 1.49 can be interpreted as the change in the value of monetary stock aggregate following a unit change in current inflation gap in the same period and same sense. If inflation were 1 point above its target, the Central Bank would increase the monetary stock aggregate by 2.8 in terms of reaction against previous inflation gap, holding other things the same. Regarding the one year lagged period of inflation gap, the coefficient 2.8 can be interpreted as the change in the value of monetary stock aggregate following a unit change in previous inflation gap in the same period and same sense.

Considering the output, the results show that the Central Bank of Rwanda reacts to 1unit change in the current output gap by a change of 0.54 units in the monetary stock aggregate inversely, and by a change of 0.09 units in the monetary stock aggregate positively, holding other things the same.

Considering the exchange rate, the results show that the Central Bank of Rwanda reacts to 1unit change in the current exchange rate by a change of 0.08 in the monetary stock aggregate inversely and previous exchange rate by 0.31 in the monetary stock aggregate inversely holding other things the same.

When looking at the results more closely with the objective of highlighting the variable that has influenced monetary policy decisions over the period of study, it is apparent that the monetary authorities were mainly concerned with the exchange rate. This is relevant given the importance of the exchange rate in a small, open, and developing country especially Rwanda, in the present case. Indeed, as noted previously, the exchange rate policy in Rwanda aims at approaching a balanced level of the exchange rate, to stabilize prices, to ensure a support for the growth and to connect Rwanda's foreign exchange market to the international market. These objectives are pursued under a controlled flexible policy regime, that is, the exchange rate can fluctuate from day to day but the Central Bank attempts to influence the exchange rate by buying and selling currencies in the foreign exchange market. The impact of such interventions is to affect the monetary base. According to this fact, the exchange rate considerations play a great role in the conduct of monetary policy and this has been shown through the estimation results.

Given the fact that Rwanda has a strong dependence on assistance from multilateral financial institutions which in its turn has a real impact on the balance of payment, apparently, the importance of reacting to exchange rates seems to be relevant in Rwanda since it could limit the pressure exerted on the Rwanda currency in order to meet international prices and the debt service management. In addition, these findings about the exchange rate influence on monetary policy are consistent with the state of the Rwanda's economy from 1995 when it started to benefit from financial assistance from international institutions in the context of the Enhanced Structural Adjustment Facility (ESAF) and the Poverty Reduction and Growth Facility (PRGF). This may lead one to think that changes in the flow of international assistance could contribute to the significant changes in official reserves for the country.

précédent sommaire suivant









Aidez l'hopital de Montfermeil

Moins de 5 interactions sociales par jour