@workingpaper{Asongu2013bv,
title = {Does Money Matter in Africa? New Empirics on Long- and Short-run Effects of Monetary Policy on Output and Prices},
author = {Simplice A Asongu},
editor = {African 2013 Governance and Development Institute WP/13/005},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Does-money-matter-in-Africa.-New-empirics-on-Long-and-Short-run-Effects-of-Monetary-Policy-on-Output-and-Prices.pdf},
year = {2013},
date = {2013-01-01},
abstract = {Purpose – While in developed economies, changes in monetary policy affect real economic
activity in the short-run but only prices in the long-run, the question of whether these
tendencies apply to developing countries remains open to debate. In this paper, we examine
the effects of monetary policy on economic activity using a plethora of hitherto unemployed
financial dynamics in inflation-chaotic African countries for the period 1987-2010.
Design/methodology/approach – VARs within the frameworks of VECMs and simple
Granger causality models are used to estimate the long-run and short-run effects respectively.
A battery of robustness checks are also employed to ensure consistency in the specifications
and results.
Findings – But for slight exceptions, the tested hypotheses are valid under monetary policy
independence and dependence. Hypothesis 1: Monetary policy variables affect prices in the
long-run but not in the short-run. For the first-half (long-run dimension) of the hypothesis,
permanent changes in monetary policy variables (depth, efficiency, activity and size) affect
permanent variations in prices in the long-term. But in cases of disequilibriums only financial
dynamic fundamentals of depth and size significantly adjust inflation to the cointegration
relations. With respect to the second-half (short-run view) of the hypothesis, monetary policy
does not overwhelmingly affect prices in the short-term. Hence, but for a thin exception
Hypothesis 1 is valid.
Hypothesis 2: Monetary policy variables influence output in the short-term but not in
the long-term. With regard to the short-term dimension of the hypothesis, only financial
dynamics of depth and size affect real GDP output in the short-run. As concerns the long-run
dimension, the neutrality of monetary policy has been confirmed. Hence, the hypothesis is
also broadly valid.
Practical Implications – A wide range of policy implications are discussed. Inter alia: the
long-run neutrality of money and business cycles, credit expansions and inflationary
tendencies, inflation targeting and monetary policy independence implications.
Country/regional specific implications, the manner in which the findings reconcile the
ongoing debate, measures for fighting surplus liquidity, caveats and future research directions
are also discussed.
Originality/value – By using a plethora of hitherto unemployed financial dynamics (that
broadly reflect monetary policy), we provide significant contributions to the empirics of
money. The conclusion of the analysis is a valuable contribution to the scholarly and policy
debate on how money matters as an instrument of economic activity in developing countries.},
keywords = {Monetary Policy; Banking; Inflation; Output effects; Africa},
pubstate = {published},
tppubtype = {workingpaper}
}

@workingpaper{Asongu2013b_27,
title = {How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices},
author = {Simplice A Asongu},
editor = {African 2013 Governance and Development Institute WP/13/013},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/How-would-monetary-policy-matter-in-the-proposed-African-monetary-unions.pdf},
year = {2013},
date = {2013-01-01},
abstract = {We analyze the effects of monetary policy on economic activity in the proposed
African monetary unions. Findings broadly show that: (1) but for financial efficiency in the
EAMZ, monetary policy variables affect output neither in the short-run nor in the long-term
and; (2) with the exception of financial size that impacts inflation in the EAMZ in the shortterm,
monetary policy variables generally have no effect on prices in the short-run. The
WAMZ may not use policy instruments to offset adverse shocks to output by pursuing either
an expansionary or a contractionary policy, while the EAMZ can do with the ‘financial
allocation efficiency’ instrument. Policy implications are discussed.},
keywords = {Monetary Policy; Banking; Inflation; Output effects; Africa},
pubstate = {published},
tppubtype = {workingpaper}
}

@workingpaper{Asongu2013b_30,
title = {New Empirics of monetary policy dynamics: evidence from the CFA franc zones},
author = {Simplice A Asongu},
editor = {African 2013 Governance and Development Institute WP/13/016},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/New-Empirics-of-monetary-policy-dynamics.-Evidence-from-the-CFA-franc-zones.pdf},
year = {2013},
date = {2013-01-01},
abstract = {Purpose – A major lesson of the EMU crisis is that serious disequilibria in a monetary union
result from arrangements not designed to be robust to a variety of shocks. With the specter of
this crisis looming substantially and scarring existing monetary zones, the present study has
complemented existing literature by analyzing the effects of monetary policy on economic
activity (output and prices) in the CEMAC and UEMOA CFA franc zones.
Design/methodology/approach – VARs within the frameworks of VECMs and Granger
causality models are used to estimate the long-run and short-run effects respectively. Impulse
response functions are further used to assess the tendencies of significant Granger causality
findings. A battery of robustness checks are also employed to ensure consistency in the
specifications and results.
Findings – Hypothesis 1: Monetary policy variables affect prices in the long-run but not in
the short-run in the CFA zones (Broadly untrue). This invalidity is more pronounced in
CEMAC (relative to all monetary policy variables) than in UEMOA (with regard to financial
dynamics of activity and size). Hypothesis 2: Monetary policy variables influence output in
the short-term but not in the long-run in the CFA zones. Firstly, the absence of co-integration
among real output and the monetary policy variables in both zones confirm the long-term
dimension of the hypothesis on the neutrality of money. The validity of its short-run
dimension is more relevant in the UEMOA zone (with the exception of overall money supply)
than in the CEMAC zone (in which only financial dynamics of ‘financial system efficiency’
and financial activity support the hypothesis).
Practical Implications – (1) Compared to the CEMAC region, the UEMOA zone’s monetary
authority has more policy instruments for offsetting output shocks but fewer instruments for
the management of short-run inflation. (2) The CEMAC region is more inclined to nontraditional
policy regimes while the UEMOA zone dances more to the tune of traditional
discretionary monetary policy arrangements. A wide range of policy implications are
discussed. Inter alia: implications for the long-run neutrality of money and business cycles;
implications for credit expansions and inflationary tendencies; implications of the findings to
the ongoing debate; country-specific implications and measures of fighting surplus liquidity.
Originality/value – By using a plethora of hitherto unemployed financial dynamics (that
broadly reflect money supply), we have provided a significant contribution to the empirics of
monetary policy. The conclusion of the analysis is a valuable contribution to the scholarly and
policy debate on how money matters as an instrument of economic activity in developing
countries and monetary unions.},
keywords = {Monetary Policy; Banking; Inflation; Output effects; Africa},
pubstate = {published},
tppubtype = {workingpaper}
}