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FISCAL DOMINANCE AND MONETARY POLICY EFFECTIVENESS IN SUB–SAHARAN AFRICA
Abstract
This study examined presence of fiscal dominance and effectiveness of monetary policy in Sub-Saharan Africa countries between 1995 to 2018. Thirty three Countries were selected for the study. Data for the study were sourced from world Bank online database, IMF online database and Central Banks of the selected countries. The study employed panel vector Error Correction as estimation technique. Results obtained from our various empirical estimations showed negative and insignificant response of monetary policy variables to fiscal policy variables. Based on this finding, the study therefore concludes that there is absence of fiscal policy dominance in the conduct of monetary policy in the selected Sub-Saharan Africa countries during the study period. The study recommends that for the attainment of macroeconomic policy stability, both monetary and fiscal policy are required to be used simultaneously.
Keyboards; fiscal dominance, monetary policy VECM and Sub-Saharan Africa.