The Effectiveness of Monetary Policy in the Context of Central Bank Independence in Developing Countries: Case of Morocco
The Effectiveness of Monetary Policy in the Context of Central Bank Independence in Developing Countries: Case of Morocco

Author(s): Moulay-driss Saikak, Radouane Raouf
Subject(s): Economy, National Economy, Supranational / Global Economy
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: monetary policy efficiency; central bank independence; central bank transparency; SVAR
Summary/Abstract: The objective of independent central banks is to ensure price stability to achieve macroeconomic stability, because controlling inflation depends on the effect of monetary policy on activity. So central banks have two mandates. They act on the interest rate based on the economic situation. To ensure price stability, most developed and developing countries have made their central banks independent and transparent. Independence strengthens the credibility of monetary authorities and makes monetary policy in this context more effective. To verify the effectiveness of monetary policy within the framework of the independence of the central bank, we mobilized a SVAR model for the Moroccan case. The study covers two separate periods on a quarterly basis (1994 to 2005 and 2006 to 2020) to take account of the effective implementation of independence. The results imply an efficient transmission of monetary policy, and we conclude that the framework of independence is a good solution to conduct monetary policy for BAM.

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