Bank of Botswana's Reaction Function: Modelling Botswana's Monetary Policy Strategy

Setlhare, Lekgatlhamang

doi:10.1111/j.1813-6982.2004.tb00118.x

Cited by 3 publications

(2 citation statements)

References 17 publications

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“…As indicated by Setlhare (2004), the advancement of Botswana's monetary policy can be placed in two noteworthy categories. The primary category, from 1976 to 1988, is described by financial restraint, while the second category, from 1988 to the present, is portrayed by financial liberalisation.…”

Section: Sacumentioning

confidence: 99%

The Impact of Fiscal and Monetary Policy on Economic Growth in Southern African Custom Union (SACU) Member Economies between 1980 and 2017: A Panel ARDL Approach

Monamodi

2019

SSRN Journal

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This study seeks to investigate the impact of fiscal and monetary policy on economic growth in Southern African Custom Union (SACU) member economies between 1980 and 2017. Government expenditure and revenue were used as the proxy variables for the fiscal policy whereas real interest rate, inflation, official exchange rate and M2 money supply were used as the proxy variables for monetary policy. Using Lin, Levin and Chu (LLC), and Im, Peresan and Shin (IPS) unit root tests, it was found that all variables were stationary at level except for M2 money supply which was found to be stationary after first difference. Due to this, Panel Auto Regression Distributed Lags (PARDL) estimation technique was utilized in this study. Pooled Mean Group (PMG) PARDL model estimator was used in this study. The results indicate that fiscal and monetary policy influence economic growth significantly in the long run. However, fiscal policy is only significant if government expenditure is used as the functional policy instrument rather than government revenue. In the short run, the effects of these two macroeconomic policies on economic growth are mixed. Granger causality results indicate that the direction government expenditure, real interest rate, inflation and official exchange rate Granger cause economic growth. These causality links are unidirectional in nature. Lastly, the results also indicate that private investment is crowded out in the long run because of significant high levels of government expenditure in the long run across SACU member economies. In the short run, private investment is crowded out because of significant high level of government expenditure only in Swaziland. As some of the recommendations of this study, SACU member governments should redirect their public expenditures into investing more in human capital. Investing in human capital, among other factors can include empowering the active unemployed population with relevant skills that meet labor markets for easy employment. In that case, the tax revenues would increase which could play an important role in reducing government budget deficits. Furthermore, SACU member economies' central banks can make monetary policy more effective by using monetary accommodation. Hence, when the governments apply expansionary fiscal policy, the central banks can increase money supply to avoid interest rates from increasing (monetizing budget deficit).

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Section: Sacumentioning

confidence: 99%

The Impact of Fiscal and Monetary Policy on Economic Growth in Southern African Custom Union (SACU) Member Economies between 1980 and 2017: A Panel ARDL Approach

Monamodi

2019

SSRN Journal

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“…Masalila and Motshidisi (2003), a study of the Bank for International Settlements by two researchers from the Bank of Botswana provides the background of the exchange rate policy of Botswana in more detail. 23 See, for example, Bleaney and Lisenda (2001) and Setlhare (2004). 24 The de facto inflation targeters in Stone and Bhundia (2004) include the full-fledged integration targeting regime and implicit price stability anchor, while exchange rate anchor comes from nonautonomous (monetary policy) regime and exchange rate peg.…”

Section: Comparisons With Other Classificationsmentioning

confidence: 99%

A Tale of Two Regimes: Classifying and Revisiting the Monetary Policy Regimes

Wong

Chong

2014

SSRN Journal

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The existing literature on the performance of monetary policy regimes is separate and isolated, with unidentified monetary policy framework for floating rate regime in the exchange rate regime literature and non-inflation targeting regime in the inflation targeting literature. This paper proposes a comprehensive de facto classification of monetary policy regimes based on the behavior of economic variables. The result reveals a non-negligible number of "hidden inflation targeters", which use inflation targeting monetary policy in the absence of formally announced inflation targets. Based on the classification result, we also document monetary history and stylized facts that are highly consistent to our conventional understandings.

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Development Strategies and Poverty Reduction in Botswana

Siphambe

2012

Developmental Pathways to Poverty Reduction

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This is not a formal UNRISD publication. The responsibility for opinions expressed in signed studies rests solely with their author(s), and availability on the UNRISD Web site (www.unrisd.org) does not constitute an endorsement by UNRISD of the opinions expressed in them. No publication or distribution of these papers is permitted without the prior authorization of the author(s), except for personal use.

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Bank of Botswana's Reaction Function: Modelling Botswana's Monetary Policy Strategy

Cited by 3 publications

References 17 publications

The Impact of Fiscal and Monetary Policy on Economic Growth in Southern African Custom Union (SACU) Member Economies between 1980 and 2017: A Panel ARDL Approach

The Impact of Fiscal and Monetary Policy on Economic Growth in Southern African Custom Union (SACU) Member Economies between 1980 and 2017: A Panel ARDL Approach

A Tale of Two Regimes: Classifying and Revisiting the Monetary Policy Regimes

Development Strategies and Poverty Reduction in Botswana

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