Monetary policy in Kenya, 1967-88

Abstract

ODI Working Papers present in preliminary form work resulting from research undertaken under the auspices of the Institute. Views expressed are those of the authors and do not necessarily reflect the views of ODI. Comments are welcomed and should be addressed directly to the author. This Working Paper is one of seven country studies prepared as part of a study of the role of monetary policy in primary product-dependent, low-income countries. The objective of the general study is to examine what monetary policy can be expected to accomplish and what are the principal constraints upon its effectiveness. The country studies examine the development of monetary institutions, the determination of money supply and demand, and the objectives and experience of governments in implementing monetary policy in individual countries. Other case studies include China, C6te d'lvoire, Bangladesh and Indonesia. It is hoped that the final report will be published in 1991. The project is directed at ODI by Sheila Page. We are grateful for financial support from the Overseas Development Administration, The Rockefeller Foundation and the International Development Research Centre of Canada. This Working Paper draws upon the data base and econometric analyses presented in the companion Working Paper No. 42 (forthcoming) by F.M. Mwega, 'An Econometric Study of Selected Monetary Policy Issues in Kenya'. Only the results are reported here, however, and readers requiring more information are referred to the companion paper. The authors are respectively Senior Research Fellow, ODI, and Lecturer in Economics, University of Nairobi. We would like to express our great gratitude to all those in the public and private sectors who gave so freely of their time to discuss with us the issues which are the concern of this Working Paper and whose guidance greatly enriched our understanding of Kenya's monetary policies. We are also much indebted to Edward Nyongesa for his statistical help, and to Mohsin Khan, Chris Lane, Sheila Page, Terry Ryan and others who commented most helpfully on an earlier draft. Naturally, the authors alone are responsible for the views expressed here.