The exchange rate channel and monetary policy transmission in Namibia
Abstract
This paper investigates the exchange rate channel of monetary policy transmission in Namibia
over the quarterly 1993:Q1 - 2011:Q4. The empirical analysis was conducted using innovation
accounting tools such as generalised impulse response functions and forecast error variance
decompositions obtained from a structural vector autoregressive model (SVAR). The results show
that the exchange rate channel is operational. That is, changes in the monetary policy
instruments affect the exchange rate variable which in turn transmits the shocks to output and
prices but weak and not so significant.