• English
    • français
  • English 
    • English
    • français
  • Login
View Item 
  •   Repository Home
  • Research Papers (RP)
  • RP-School of Education
  • RP-Department of Educational Management Policy & Curriculum Studies
  • View Item
  •   Repository Home
  • Research Papers (RP)
  • RP-School of Education
  • RP-Department of Educational Management Policy & Curriculum Studies
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

The Choice Of Optimal Monetary Policy Instrument For Kenya

Thumbnail
View/Open
Full text Article (910.2Kb)
Date
2012-01
Author
Gichuki, James
Oduor, Jacob
Kosimbei, G. K.
Metadata
Show full item record
Abstract
The Central Bank of Kenya (CBK) has over the years used monetary policy to stabilize both inflation and output using two instruments; interest rates and reserve money simultaneously. However, literature suggests that the two instruments used simultaneously will not be effective in hitting the monetary policy targets. In fact, the CBK has over the years missed its inflation target, a fact that could in part be explained by the use of the two instruments simultaneously. The CBK therefore must make a choice between the two instruments. Literature suggests that the choice depends on the economic environment of the country in question. Furthermore, some literature argues that a combination policy which is a mix of these two instruments may work better than either of the two used independently. Using data for the period 1994 to 2010 and an error correction model (ECM), this study establishes that the interest rates result in minimum losses in output compared to the reserve money instrument. Furthermore, a combination instrument minimizes losses from equilibrium output better than the other two instruments taken independently. There is therefore need for the CBK to adopt a pure interest rate instrument policy strategy if it desires to use one isolated instrument. Better still; there is need for the CBK to construct a monetary policy conditions index which would help in the implementation of a combination instrument policy.
URI
http://ir-library.ku.ac.ke/handle/123456789/6752
Collections
  • RP-Department of Educational Management Policy & Curriculum Studies [269]

Designed by Library ICT Team copyright © 2017 
Contact Us | Send Feedback

 

 

Browse

All of RepositoryCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsThis CollectionBy Issue DateAuthorsTitlesSubjects

My Account

LoginRegister

Designed by Library ICT Team copyright © 2017 
Contact Us | Send Feedback