Global Economic Uncertainty and Monetary Policy Intervention: A Case Study of Sub-Saharan African Countries

Abstract

This study examined the impact of conventional and unconventional monetary policy intervention on economic uncertainty in Sub-Saharan African countries, between 1980 and 2019. Panel Autoregressive Distributed Lag model was employed with a cross-sectional analysis. Findings of the study revealed that, in the short-run using the general panel result, unconventional monetary policy has significant interventional capacity to resuscitate economic uncertainty and restore steady state, while the conventional monetary policy (interest rate) could not have any significant impact. However, in the long-run period, both policies did not indicate any significant impact. Individually, cross-sectional coefficients showed clearly that, in the short-run, both conventional and unconventional monetary policies improved economic uncertainty. The individual speed of adjustment indicated a significant correction of the uncertainty back to a steady state, though at different levels and speeds which could depend on different local factors. The study, therefore, recommends that countries could further reduce their official interest rate as it is quite high compared to other developed nations. Also, though, conventional monetary policy is still effective in the short-run, based on individual countries, the unconventional monetary policy should be given priority in improving economic uncertainty and making nations return to a steady state.